# Taxes and GDP, where do these come in in the formula?

We all know that the formula for GDP I'd given by

GDP = C + I + G + NX

I would like to know, whether I am right in deducing that when consumers and industry pay taxes, or when there are import and export taxes I suppose, these do not increase the value of C and I in the equation. Instead, these increase the value of G, provided that the money supplied in taxes to the government is spent.

Is this correct?

Thanks.

In this equation:

GDP = C + I + G + NX

Taxes come from a combination of C+I but are offset by an increase in G.

Any government taxation which is not spent is an investment, so remains part of I.

• Why did you use the term offset. Are we talking about positive and negative quantities? I don't think so. I think just G increases, leaving C and I unchanged. Is it not so? Jun 4 '19 at 10:29
• I mean, the taxes are included as part of the G value, but not as part of C and I, correct? Jun 4 '19 at 10:31
• Taxes fund government spending and typically come at a cost to consumption. An expanded GDP equation would be: Y = C(Y - T) + I + G + NX Jun 4 '19 at 15:35
• What are Y and T in your equation? Jun 5 '19 at 16:32
• Also, don't they come at the cost of I as well. Too many taxes mean companies move abroad where there are less taxes. Jun 5 '19 at 16:33