SK GDP almost 10%

[Max Sawicky]

. . . Citing research by Saul Hymans, director of economic 
forecasting at the University of Michigan, staff writer Anna Bernasek 
says that the surplus would disappear entirely if the market fell 
back to a mere 10% annual growth rate (still above historical 
averages). It's not just the contribution of cap gains that would 
disappear - a lot of upper bracket incomes would shrink. Max, you buy 
this?
Doug
>>>

I'd have to read the piece.  A few splashes of
cold water:

More than half of the
surplus over the decade is from payroll taxes.  These
would be expected to hold up better than income taxes.
Even if income tax revenues tanked sufficiently to
eliminate the 'on-budget' surplus, there could still
be an overall surplus.  Payroll is projected taking
into account the likelihood of recessions.

Don't forget capital gains enjoy preferred rates, so
the revenue proceeds are not as high, hence the reduction
of gains occasions less of a revenue loss.  Capital
loss deductions from other income (i.e., in excess of
gains) cannot exceed $3K in a year (the rest is carried
over, hence the revenue loss is spread out).

I've pointed out the partial and temporary effect of
capital gains on revenues in the past.  Taxes do
derive from dividends, interest, and profits.  Much
of the buzz about market valuations stems from their
outpacing mundane these literal revenue streams.  It
could follow that slower growth of valuations is similarly
absent from the picture of literal revenues.  To this
extent, a market drop would not reduce tax revenues
from capital income.

mbs