Thursday, October 11, 2012

A difference I've noticed in how economists talk about taxes and the budget vs. how non-economists (and actually, some economists) talk about it

When you talk with non-economists about taxes, they usually take their income as given and then think about their taxes given that income level. That's not how economists think about it, of course. We think about income as a factor to be explained, and we think it's quite related to tax policy and fiscal policy more generally.

When you talk with non-economists about the budget and the deficit, they similarly usually take national income as given (or even as irrelevant) and think about the budget as simply a matter of balancing the books. Economists, alternatively, think about the fiscal stance as critically informing the level of national income and employment (and vice versa).

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