Questions about GDP, Disposable Income, and Tax

作者:jingchen
发表时间:
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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.

 


2000

2010

2020

GDP

41800

48400

63200

Disposable income

27300

36100

45700

Taxation

7224.199

6990.291

12300

sum of disposable income and tax

34524.2

43090.29

58000

Difference between GDP and sum

7275.801

5309.709

5200

 

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?