In theory, this could be deflationary, but there are a few reasons this probably wouldn't be effective.
- It usually takes at least a year before tax changes are proposed before they take effect
- They are always accompanied by spending increases that neutralize any potential deflationary effects
- You actually can't actually increase taxes that much. For example, the US Fed has quantitatively tightened roughly $600 billion in the past 6 months. The Biden corporate tax increases are estimated to bring in $50 billion, and windfall tax proposals also tend to hover around that order of magnitude.
- It usually takes at least a year before tax changes are proposed before they take effect
- They are always accompanied by spending increases that neutralize any potential deflationary effects
- You actually can't actually increase taxes that much. For example, the US Fed has quantitatively tightened roughly $600 billion in the past 6 months. The Biden corporate tax increases are estimated to bring in $50 billion, and windfall tax proposals also tend to hover around that order of magnitude.