When taxes are raised, government expenditure also rises as well, which causes the real GDP to fall whenever taxes are raised.
The GDP of any country helps to determine the economy and the factors of growth. It helps to determine the value of goods produced and utilized by the consumer in a country.
The increase in GDP shows the growth factor which reflects increases in the purchasing parity of the consumer and they spend more on buying goods and services. This will show they improve the standard of living.
The real GDP will always fall whenever taxes are raised since eventually they will lead to higher government spending. Because of this, a $30 increase in after-tax income will result in a $30 decrease in real GDP in this particular situation.
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