Cause and Effect: Expenditure, Deficit, and Marginal Taxes

Government spending minus Net Taxes equal a budget Deficit when expenditures exceed tax revenues. At some point whatn you increase spending you must also increase income (tax revenue is government income). So higher spending will lead to higher tax rates which will lead to a reduced deficit. Right...


In a future post I hope to get all this data on the same time scale and add a graph of government revenue as a percentage of GDP.