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Sun 17 Nov, 2019 10:22 pm
If gov raises taxes and spending in the same amounts, the end result is:
The impact on the debt and on deficit spending will be: no change. The increase in taxes will offset the increase in spending.
There will of course be higher taxes and more spending.
It depends on what taxes they raise and what they spend the revenue on. An income tax surcharge on the wealthy with the money going to fund the deficit will have a different result than a tax on all sales transactions spent on Medicare, or raising capital gains taxes to fund the military.
@riyap7747,
I think Hightor hit the nail on the head. If raising taxes results in less spending from individuals but more spending from the government, it is a wash overall although where the money gets spent changes. If raising taxes results in less saving/investment from individuals but more government spending, you get more economic activity from spending but less capital available so higher interest rates.