I have written before of the Daily Treasury Statement, and how that collection report correlates with liquidity thus the movement of the Stock Market. It is a simple issue of supply and demand. There are other factors of course like the availability of equities for sale, but the year over daily statement gives tight statistical correlation. The last post of the DTS was for last Friday. As of that date, the daily collection ran 25% behind last year. The month to date, 2% ahead, and significantly the YTD is 2.5% ahead. These numbers are highly relevant because they represent the entire population not a sampling. These numbers are volatile, day to day. You might want to look. http://www.fms.treas.gov/dts/04052100.pdf
What does this mean? Well we might expect to see a retreat in the market in the next few days, and a bounce if the daily year over moves back into a positive remainder. The tax revenue belies the mantra of political correctness. Surprised? Don’t be. The tax revenue is based a lot on the GDP and only a little on the rate. Surprised still? The same money is taxed multiple times in a given year! (That is the product in GDP) How many times that is, has far more to do with the revenue than a small shift in the rate. Note that this observation has nothing to do with the argument about the affect of taxes on the economy, one way or the other. Clearly, however, the economy needs to be stronger.
What does this mean? Well we might expect to see a retreat in the market in the next few days, and a bounce if the daily year over moves back into a positive remainder. The tax revenue belies the mantra of political correctness. Surprised? Don’t be. The tax revenue is based a lot on the GDP and only a little on the rate. Surprised still? The same money is taxed multiple times in a given year! (That is the product in GDP) How many times that is, has far more to do with the revenue than a small shift in the rate. Note that this observation has nothing to do with the argument about the affect of taxes on the economy, one way or the other. Clearly, however, the economy needs to be stronger.
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