Nah, money gets created if taxing destroys it. The mechanism doesn't need to get worked that way. It can be currency created out of thin air to purchase something value-added?
Destroying more accumulation farther down the income ladder would be necessary, I think. But that could be targeted by asset or income type. Just letting things run away is a tax on the bottom. It really is all political decisions to an extent, like ya said!
Edit: bleh. I hate it when it starts getting cold. I was putting it off, but now I've made it worse. I'm having this conversation while literally inflicting mass carnage on tiny mammals for daring to share my warmth and eat my crumbs. I suppose it's making my points weird.
The first point is an accounting identity.
If there’s a flow of 200 and ten families earn 20 each, and that’s the whole economy, and then one family defers consumption by ten, the next cycle there’s a flow of 190. That loss could be 10, I employing one family by half, to keep it concentrated, or about -1.1 to the other families if spread. Assume each dollar is spent once per time unit. If that trend continues, as downward prices are sticky (for non volatile things like wages they are) you will have one family’s savings slowly drying up the demand for labor in the economy.
In theory (literally) the savings demand could be waiting for the other families to create a thing worth buying, but then where does the investment come from? Their savings, ideally, but now with concentrating ownership if that cycle continues.
Or instead of owning the investment they just lend to another family to own the investment, take interest. But they keep saving.
Now that 200 full employment is increasingly private loans. And how to pay the interest if the interest goes to the savers? More borrowing. The end game of this economy if it doesn’t collapse from some shock that interrupts the conversion of 200 no debt money to 200 only debt money, is that all money is the increasing obligations to the bank family.
Or they could vote more money.
But as an accounting reality, that savings has to have a corresponding entry on the system measurement. Unemployment, private debt, or fiat.
If this system had taxes and spending, and you increased taxes, the money that gets created if taxing destroys it must come from an action, because there’s no passive next step. That action is either private loans full the gap (this is the late 90s and mid late 2000s) or the legislature votes new money. Those are the primary sources in the ultimate form.
Like the federal government has to run a deficit just to meet the savings demand of the United States, adjusted for international trade, lest the ratio of private debt increases. And a government surplus plus increasing private debt just means more surplus and more private debt until something gives and pop! Unemployment.