Does Lerner’s “Functional Finance” support greatly increased tax progressivity?

In his 1943 paper "Functional Finance and the Federal Debt," Abba Lerner argues that for a monetary sovereign, taxation serves functional rather than revenue purposes. Because a government can always create money to meet its obligations, the first-order economically significant effect of taxation is that taxpayers have less money to spend, which reduces private spending and thereby helps control inflation. Lerner concludes: "taxing is never to be undertaken merely because the government needs to make money payments… taxation must be judged only by its effects."

Lerner conceived of Functional Finance as a macroeconomic instrument. His First Law tells us how much to tax; it says nothing about whom to tax or in what proportions. He leaves unanswered the question of how the tax burden should be allocated in principle.

Nonetheless, the nature of that burden suggests a natural candidate for an equity criterion. If taxation is a deliberate reduction in private spending capacity, imposed to ensure the broadly enjoyed benefits of a stable currency, and if we accept that the sacrifice required to provide that general benefit should be borne equally by all taxpayers, then equal treatment would require each taxpayer to bear an equal proportional reduction in their effective discretionary consumption capacity, which can be approximated by their propensity to consume. Because the propensity to consume declines as income rises, a tax schedule that is equal by this measure is necessarily progressive when measured against income. What is equal against one metric is progressive against another.

Under current US tax schedules, the very wealthy do pay more in absolute terms than those of lesser means. But the absolute magnitude of payments is the wrong measure. Because the propensity to consume declines as income rises, an equal proportional reduction in that propensity requires steeply higher effective rates on the wealthy and those with high incomes. Existing schedules do not appear to achieve this: the very wealthy pay more, but not enough more. Measured against this standard of equal treatment, those with great wealth or high incomes are undertaxed and those with less income are overtaxed.

Does Lerner's "Functional Finance" support greatly increased tax progressivity?

[1] Lerner, Abba P. 1943. “Functional Finance and the Federal Debt.” Social Research 10 (1): 38–51. https://www.jstor.org/stable/40981939