Fiscal incidence also produces regular estimates of the impact of government taxes and spending on household income. Fiscal incidence Fiscal incidence is a concept within public finance, a sub-discipline within economics, that refers to the combined overall economic impact of both government taxation and expenditures on the real economic income of individuals. While taxation reduces the economic well-being of individuals, government expenditures raise their economic well-being. Fiscal incidence is the term for the overall impact of government taxing and spending considered together. In theory, governments withdraw resources from society in the form of taxation, and contribute resources back into society in the
Fiscal policy a lower aggregate demand for goods and services, contrary to the objective of a fiscal stimulus. Neoclassical economists generally emphasize crowding out while Keynesians argue that fiscal policy can still be effective especially in a liquidity trap where, they argue, crowding out is minimal. Some classical and neoclassical economists argue that crowding out completely negates any fiscal stimulus; this is known as the Treasury View, which Keynesian economics rejects. The Treasury View refers to the theoretical positions of classical economists in the British Treasury, who opposed Keynes' call in the 1930s for fiscal stimulus. The same general argument has been