The relationship between taxes and the gross domestic product
The relationship between taxes and the gross domestic product is based on the revenue that the country earns. Also, the domestics’ product is based on the value of the marketing goods and the services in the country. The taxes are related to the gross product since the total product of the country determines the tax rates. Some countries like the United States increase the ratio of charge to gross domestic products so that they can address the issues of the economic problems (Kalaš, 2017). The higher the gross domestic product, the more the tax collected by the government, and the lower the GDP, the lower the collected taxes. The government and economists can apply this ratio to fuel the economy. In understanding the ration to GDP ratio, it is a metric that is used by the government to control the resources in the marketplace. This ratio the revenues collected from the taxes, product sales tax, fines, penalties, social security payments includes, and others. The developed are said to have a higher tax-to-GDP ratio compared to the developing countries whose rate is lower (OECD, 2019). The tax to GDP ratio is essential and is utilized to measure the resources in the country and how they can be managed to ensure high living standards of the community.
The tax to the GDP United States is higher compared to that of the gulf area. The reason why the ratio is lower in the gulf area is that spending in Asia is lower than in the United States. In the Gulf area, the benefits of the citizens are provided by institutions such as firms and churches. The individuals do not have to get employed to get their resources. In some countries in Asia, the government has worked hard to ensure that lifetime employment is offered to the population (Jewell et al., 2015). However, in the United States, unemployment is very high hence low gross domestic product. The rate of firing employed is the United States is top, lowering the taxes, and therefore the economic status is profoundly affected. The price of unemployment reduced the gross domestic product and hence lowered taxes. The areas in the gulf area do not have to work and therefore lower production from the citizens. Lower production reduces the tax and hence the lower economic growth. Compared to the United States, the gross domestic product of the country is high, ensuring high rates of taxation. The taxes are then used for the growth of the community through education and infrastructure. For the reason of high taxation, the United States has been categorized as a developing country.