Won’t increasing government spending be inflationary?

If increased government spending is funded by higher taxes on the wealthiest, this will not have an inflationary effect, because at the same time as spending more money in the economy, the government is slightly limiting the consumption of a particular group of taxpayers—the ultra wealthy. It has the added benefit of tackling inequality and increasing costs of living by limiting the extent to which the wealthy can buy up our assets.

Many economists see taxation as a key instrument for controlling inflation. The wealthy do not drive inflation by pushing up prices for basic goods like groceries, but they do contribute to inflation by driving up asset prices (and therefore rents, etc.), and the prices of scarce resources.

Therefore, if government slightly limits the spending power of the wealthy through taxation and invests in providing services and reducing inequality, the overall level of money circulating in the economy is not increasing, it is just being distributed more equitably and productively.