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Is the choice between financing government spending by taxes or deficits better understood as a choice...

Is the choice between financing government spending by taxes or deficits better understood as a choice between taxing today and taxing tomorrow?

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Answer #1

Not necessarily. If government spending is for consumption purpose i.e. If major portion of government spending is revenue expenditure then financing government spending by taxes or deficits is better understood as choice between faxing today and taxing tomorrow.

However if mayor portion of government spending is for production purposes i.e. capital expenditure then expenditure today can generate more money in future and government need not tax tomorrow for repayment of deficit. Thus it is not c hoice between taxing today and taxing tomorrow.

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