The “income minus spending theory of wealth” when applied to states implies that if the state cuts spending then the economy would be better. But that’s definitely not true always (for example, research spending), but in the general sense it’s also not true according to some macroeconomic models (like Modern Monetary Theory). Since the state’s wealth is the economy as a whole, not it’s balance sheet, modeling income as taxes and spending as government expenditures doesn’t line up. Increasing taxes decreases the size of the economy but prevents inflation from occurring. Government expenditures increases the size of the economy by stimulating it but can cause inflation. A state increases its wealth by having expenditures and taxes work together correctly to stimulate the economy without unreasonable levels of inflation. That’s leaving aside trade with foreign countries, but it works fairly similarly.
The “income minus spending theory of wealth” when applied to states implies that if the state cuts spending then the economy would be better. But that’s definitely not true always (for example, research spending), but in the general sense it’s also not true according to some macroeconomic models (like Modern Monetary Theory). Since the state’s wealth is the economy as a whole, not it’s balance sheet, modeling income as taxes and spending as government expenditures doesn’t line up. Increasing taxes decreases the size of the economy but prevents inflation from occurring. Government expenditures increases the size of the economy by stimulating it but can cause inflation. A state increases its wealth by having expenditures and taxes work together correctly to stimulate the economy without unreasonable levels of inflation. That’s leaving aside trade with foreign countries, but it works fairly similarly.