Questions about GDP, Disposable Income, and Tax | ||||||||||||||||||||||||
送交者: jingchen 2024年01月07日23:54:51 于 [海 二 代] 发送悄悄话 | ||||||||||||||||||||||||
GDP, Disposable Income, and Taxation
From economic theory, Disposal Income = GDP – Taxation Equivalently, GDP = Disposal Income + Taxation
Does this equality hold empirically? Let’s look at US data in 2000, 2010, and 2020.
From the above table, in all years, GDP is greater than the sum of disposable income and taxation. Why does this occur?
The measurements of economic data are usually not very accurate. However, here the differences are very substantial. GDP is always greater. This suggests a systematic bias in measurement. What causes this bias?
I also have a question about the theory itself. All taxations go to support some people. Tax dollars goes to the salaries of public employees, and contractors and benefits. At aggregate level, taxation shouldn’t reduce disposable income. In other words, Disposal income per capita = GDP per capita
What’s wrong with my reasoning?
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