Economy: Taxes are Good Especially at the Macroeconomic Level

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Taxes– the word which sent ripple effects once the mind interpreted the word. A surcharge, something paid above and beyond the good you’re paying for. At times one might burst boughs of anger in coloured word as your initial calculations on what you were going to pay are wrong. Wait a minute, those taxes are working for us– or are they?

If you look at the economy at a macro level, it doesn’t take a genius to see that taxes are generally good. When looking at the expenditure approach GDP=C+I+G+Nx hence one can conclude that an increase in G equates a higher GDP. That conclusion isn’t without merit, (See Fig. 1&2.) however, it certainly has it’s flaws. Jean-François Minardi, attempts to challenge this global approach in his economic note ‘The Unintended Consequences of Taxes on Tobacco,Alcohol and Gambling’. Attacking what really make’s up these so called ‘Sin Taxes’ he says “Sin taxes are presented as a way of increasing government revenue while simultaneously helping reduce consumption of targeted products.[..]if the first is achieved and consumption of these products starts to decline, this will lead to a reduction in government tax receipts.1” Indicated that if the motive of the government was indeed to reduce consumption, they’d subsequently want to decrease GDP. Looking at the same model. A decrees in consumer spending not only directly effects GDP but also effects the governments revenues which in turn effects their spending power, thus ultimately lower GDP even

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