Liberal statistics predict no effect of tax hikes on the stock market

Taxes Versus Stocks.

Everyone knows that the tax hikes always completely destroy the economy. Yet somehow, these statistics show that there is no historical relationship between tax hikes or cuts, and changes in the stock market.

Anyone who uses good conservative common sense knows what to expect of the stock market when the government fiddles with taxes. We have heard the argument hundreds of times, on Fox News and our favorite radio talk shows. When the government raises taxes, rich investors panic and freak out and get mad and start selling everything in a huge panic, because they are dainty delicate little flowers. This causes markets to crash.

By contrast, when the government cuts taxes, investors use all of their extra money to invest in American companies, which causes the stock market to go up.

The logic is completely irrefutable. This is one of the biggest arguments for making sure that we don’t go over the fiscal cliff of 2012: allowing taxes to go up will make the stock market collapse.

BUT GIVEN ALL OF THAT… why are the above statistics completely contradicting this air-tight conservative reasoning?

Of the 15 times that taxes were cut since 1927, the stock market increased twice as many times as it decreased; however, weirdly, of the 12 times that taxes were increased, the stock market increased three times as often as it decreased!

There is a similar story with capital gains taxes: there is no clear relationship between increases or decreases in capital gains taxes and the stock market, except that maybe the stock market has increased even more often when taxes were increased than when they were cut!


Of course, there are some who suggest that the effect of taxes on the stock market is so small that is doesn’t really matter. These people suggest that no matter how good or bad the “logic” is, the simple fact is that other factors matter a lot more to the stock market than tax rates. Some even go so far as to say that people who base their investment decisions on their tax rate are obviously not very good at making investment decisions to begin with.

But we obviously disagree.

Clearly, all investors care only about their tax rates and nothing else, and increasing taxes will always completely tank the stock market, and if these so-called “statistics” seem to contradict this, then it is only because they have become infected with the liberal bias!!!!!


table data source: Fischer Investments Research
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