Accuracy in Media

Taxes suck money out of the economy, which is why the Build Back Better Bill is justified. So goes the logic at Salon in a defense of the bill.

But then, this is Salon on the subject of economics, so perhaps we should just be satisfied with it being a bad argument rather than a wrong one.

Salon really does say this too: “The higher taxes on the wealthy and corporations that the House version of the bill calls for would reduce economic activity — by taking money out of the economy — offsetting some of the impact of the spending that would stimulate it.”

The article is trying to tell us that BBB won’t increase inflation – Senator Joe Manchin’s worry – because what is being injected into the economy by all the spending is also being sucked out of it by all the taxation. Which is in fact true which is why it’s not in fact a great argument in favour of the BBB. For if we agree that that’s what happens then what BBB is actually doing is not affecting the whole economy at all. It’s just taking some money of those who earned it fair and square and spending it on those who didn’t.

This isn’t an unusual finding either. A recent report from the academic, economic, research confirms it: “From a theoretical perspective, general profit taxes should have sizeable disincentive effects on innovative activity, as higher taxes reduce the after-tax returns on investment.”

Innovative activity is also known as “making the future richer.”

Salon is listed by some measurements as still a major media outlet. It gains some 8 million views a month. It would help their readers if their economic coverage were rather more based.

The argument being made is that the BBB is good because it won’t increase inflation. Yet the method by which it won’t increase inflation is taxation of innovation and growth – which isn’t a good thing. In fact, the entire defence of BBB is that it just takes money from those who make it to send to those who don’t. Which isn’t known as a great way of expanding the economy.

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