[a_thro_away]

Taxes are included in the GDP income method, which is why taxing even air (even if free) would increase GDP. The OECD defines GDP as "an aggregate measure of production equal to the sum of the gross values added of all resident and institutional units engaged in production (plus any taxes, and minus any subsidies, on products not included in the value of their outputs).”

[chimeracoder]

> Taxes are included in the GDP income method, which is why taxing even air (even if free) would increase GDP. The OECD defines GDP as "an aggregate measure of production equal to the sum of the gross values added of all resident and institutional units engaged in production (plus any taxes, and minus any subsidies, on products not included in the value of their outputs).”

GDP is composed of four components. One of those components is government spending, which can be negative (ie, taxes) or positive (subsidies or direct purchasing).

However, government spending doesn't come from nowhere (no, even if the money is printed or issued as debt). A change in government spending is always matched by an equivalent change in consumption, investments, and/or net exports, which are the source of that money.

The secondary effects of tax policies may be to ultimately change the shape of aggregate supply or aggregate demand functions (at least, that's the argument for doing so), but taxation does not directly have any effect on GDP.

So no, taxing air would not increase the GDP.