(1) Tax Revenue Comes from Funds Spent by Government — A Query

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I have asked the below questions here:

You write: “Taxation revenue comes from funds that the government has already spent into existence.” 

I understand, however, that the largest amount of money is created by commercial banks in the process of extending credit/loans. I assume further that it is from this money that most taxes are paid/most tax revenue stems. 

Why, then, do you not write: 

“Taxation revenue comes from funds that the government has already spent into existence as well as funds that commercial banks have lent into existence?” 

Why do MMT texts tend to suggest that only money created by government provides the money that flows back to government as tax revenues? 

Am I overlooking something?

See also here and here. 

In the meantime, I have made the below replies:

Dear Derek Henry,

Thank you for your reply.

Unfortunately, I do not see how your points explain/prove that only government created money is capable of returning in the form of tax revenue.

Again, I may be overlooking something.

Can you spell out explicitly which facts and factors determine that all tax revenue must of necessity be money previously spent by government and cannot be money created by any other agent?

Thank you for your patience.

And (not published yet):

Dear paulmeli,

I refer to McLeay et al, who write

"Of the two types of broad money, bank deposits

make up the vast majority — 97% of the amount currently in

circulation.(6) And in the modern economy, those bank

deposits are mostly created by commercial banks

themselves."

(Source: https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf)

As for my principal question above, please be patient with me.

I do not see how your points explain or prove that only government created money is capable of returning in the form of tax revenue.

Again, I may be overlooking something.

Can you spell out explicitly which facts and factors determine that all tax revenue must of necessity be money previously spent by government and cannot be money created by any other agent?

Thank you for your patience.


For the answer go here.