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Strategies & Market Trends : New US Economy Policy
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To: Arthur Tang who wrote (121)3/3/1998 4:01:00 PM
From: Arthur Tang  Read Replies (1) of 435
 
The new economy and why tax collection on April 15 is less than any other month?

Surprisingly, for the last two years; the tax collection actually fall back from the normal collection to only $98 billion for the month of April. The budget balance requires $17.1 billion divided by 12 months to be $1.425 trillion per month.

The reason obviously could be the tax loss carry over, which is deducted from all capital income and some $3000 from normal income. The tax loss at year end, has a three month period that stocks were pulled back. But the tax payment date being April 15, delayed the amount of adjusted income tax collection.

Each year because of tax collection, Wall street liquidity suffered. The period between March 15 and April 15 usually resulted in stocks pulled back. This year may not be any different. However, 401k money will continue to come in up to March 10th or 12th, depending on Post Office efficiency. The check was already in the mail. If market anticipated tax payment, and pulled back early then the market will resulted in a self-fulfilling prophecy of a down market.

If we know the tax collection is going to be shy by 42.5% of normal collection due to tax loss selling; will we then be pulling back ahead of time foolishly. I think this year is going to be experimental. Market might wait and see.
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