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To: Peter O'Brien who wrote (42511)	3/28/2001 10:14:57 PM
From: Steve Dietrich	Respond to of 64865

<<So, my point is that increased capital gains tax receipts did not cause the record high of individual taxes as a % of GDP in 2000. We are still at a record high right now even after adjusting for capital gains.>> Again, yes and no. Capital gains alone account for probably just under 1/3 of the rise in tax revenue as a percentage of gdp. But they're only part of the market driven tax revenue. There are also stock options which are taxed as income and are created by the rising market. That is why Greenspan says, "we have had a very significant rise in individual tax receipts which unquestionably are reflective of the very large capital gains; and, secondarily, the impact of rising stock prices on other types of income." And why Lawrence Lindsey says, "A disproportionate share of this extra revenue is coming from upper income taxpayers through higher income tax payments. The likely reason for these payments is the booming stock market..." This is why tax rate vs. gdp is a bogus metric. Most of the gains in tax revenue were driven by the booming market, which doesn't count towards gdp. This is also one of the reasons a capital gains tax cut might be a good idea. Steve Dietrich