<p>In this equation:</p>

<p>GDP = C + I + G + NX</p>

<p>Taxes come from a combination of C+I but are offset by an increase in G.</p>

<p>Any government taxation which is not spent is an investment, so remains part of I.</p>

CC BY-SA 4.0
2019-06-04T10:29:48.583Z
Why did you use the term offset. Are we talking about positive and negative quantities? I don't think so. I think just G increases, leaving C and I unchanged. Is it not so?
Joselin Jocklingson
CC BY-SA 4.0
2019-06-04T10:31:00.180Z
I mean, the taxes are included as part of the G value, but not as part of C and I, correct?
Joselin Jocklingson
CC BY-SA 4.0
2019-06-04T15:35:07.440Z
Taxes fund government spending and typically come  at a cost to consumption. An expanded GDP equation would be:  Y = C(Y - T) + I + G + NX
Jamzy
CC BY-SA 4.0
2019-06-05T16:32:23.610Z
What are Y and T in your equation?
Joselin Jocklingson
CC BY-SA 4.0
2019-06-05T16:33:45.937Z
Also, don't they come at the cost of I as well. Too many taxes mean companies move abroad where there are less taxes.
Joselin Jocklingson
CC BY-SA 4.0
2019-06-06T07:31:49.533Z
Y is GDP, or income. Basically, the amount you spend (C), will be less if you pay tax. BUT, government spending (G) rises.
Jamzy
CC BY-SA 4.0
2019-06-06T07:32:52.190Z
There are certainly substitution effects from taxation... You are right. That is not too relevant in this formula.
Jamzy
CC BY-SA 4.0
2019-06-04T09:27:22.460Z
2019-06-04T09:27:22.460Z
Jamzy
<p>We all know that the formula for GDP I'd given by</p>

<p>GDP = C + I + G + NX</p>

<p>I would like to know, whether I am right in deducing that when consumers and industry pay taxes, or when there are import and export taxes I suppose, these do not increase the value of C and I in the equation. Instead, these increase the value of G, provided that the money supplied in taxes to the government is spent.</p>

<p>Is this correct?</p>

<p>Thanks.</p>

<gdp><taxation>
Taxes and GDP, where do these come in in the formula?
Joselin Jocklingson
# Taxes and GDP, where do these come in in the formula?

(Asked by: username_0 on 2019-06-04)

We all know that the formula for GDP I'd given by

GDP = C + I + G + NX

I would like to know, whether I am right in deducing that when consumers and industry pay taxes, or when there are import and export taxes I suppose, these do not increase the value of C and I in the equation. Instead, these increase the value of G, provided that the money supplied in taxes to the government is spent.

Is this correct?

Thanks.

**Tags:** gdp, taxation

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## 1 answers

### Answer by username_1 on 2019-06-04. Score: 2

In this equation:

GDP = C + I + G + NX

Taxes come from a combination of C+I but are offset by an increase in G.

Any government taxation which is not spent is an investment, so remains part of I.

> **Comments:**
> **username_0**: Why did you use the term offset. Are we talking about positive and negative quantities? I don't think so. I think just G increases, leaving C and I unchanged. Is it not so?  
> **username_0**: I mean, the taxes are included as part of the G value, but not as part of C and I, correct?  
> **username_1**: Taxes fund government spending and typically come  at a cost to consumption. An expanded GDP equation would be:  Y = C(Y - T) + I + G + NX  
> **username_0**: What are Y and T in your equation?  
> **username_0**: Also, don't they come at the cost of I as well. Too many taxes mean companies move abroad where there are less taxes.  
> **username_1**: Y is GDP, or income. Basically, the amount you spend (C), will be less if you pay tax. BUT, government spending (G) rises.  
> **username_1**: There are certainly substitution effects from taxation... You are right. That is not too relevant in this formula.  

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