How Taxes Impact the Cost of Government Borrowing and Bond Yields

How Taxes Impact the Cost of Government Borrowing and Bond Yields

I discuss how imposing taxes can increase the cost of borrowing for the government, leading to higher interest rates on government bonds. This is because taxes on bond transactions affect the market prices of these bonds, forcing governments to raise yields to compensate bondholders for the decrease in returns caused by the tax. As a result, the government has to pay higher interest rates to finance its operations.

https://youtube.com/shorts/FHTqBIcwrJs?si=y2TO-Bsu78Ymhkc3

Back to blog

Leave a comment

Please note, comments need to be approved before they are published.