3
$\begingroup$

GNDI- Gross National Disposable Income; GNI- Gross National Income We know that GNDI = GNI + Net Current Transfers from ROW(rest of world). What I don't understand is why is there no mention of direct taxes in this formula? Since GNI is arrived at using factor income and not primary income, aren't we supposed to subtract the direct tax paid from the GNI to arrive at GNDI since the money paid as taxes is not available for spending or saving ?

$\endgroup$

1 Answer 1

2
$\begingroup$

No, taxes are either:

  • used for transfers between individuals. One person has less to spend on consumption or investment but other person has more.
  • government income also counts as a disposable income of a nation.
$\endgroup$
2
  • $\begingroup$ Thank you for answering. But is that a legit reason, because most textbooks use the example of deducting income tax from income received to arrive at disposable income. $\endgroup$
    – 112120
    Oct 20, 2023 at 14:29
  • 1
    $\begingroup$ @112120 I am pretty sure that those textbooks talk about consumer disposable income. For a consumer you need to subtract tax from income to get disposable income because consumer cannot use income that is being taxed away by the government. But your question is about national disposable income. Government is part of a nation. $\endgroup$ Oct 20, 2023 at 15:12

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service and acknowledge you have read our privacy policy.

Not the answer you're looking for? Browse other questions tagged or ask your own question.