# What is this graph saying?

What does it mean that we are looking at a "tax increase of 1 % of GDP". What does a tax increase have to do with the GDP? If the tax is 20 %, and we raise it to 22 %, that's an increase of 2 percentage points, or 2/20 = 10 percent. What does GDP have anything to do with it?

In this case, they are looking at a tax increase that is assumed to equal 1% of nominal GDP. That is, if nominal GDP were \$100 billion, that is a tax increase of \$1 billion.