What are Net Taxes?
How Do Net Taxes Work?
Let's assume that the United States collects $40 trillion in taxes this year and makes $39 trillion in transfer payments (entitlements, budgeted spending, etc.).
Net taxes are $40 trillion - $39 trillion = $1 trillion.
Why Do Net Taxes Matter?
For governments, net taxes are a simple version of a checkbook balance. They measure the inflows and outflows of the government's tax activities. note that net taxes do not directly or necessarily reflect monetary policy, Treasury activities, investment returns, or foreign trade issues.