Uncommon Sense


Read My Lips: Higher Taxes Are Unavoidable


Michael Arone, CFA
Chief Investment Strategist, State Street Global Advisors

Source: Peter G. Peterson Foundation. Office of Management and Budget, Historical Tables, Budget of the US Government: Fiscal Year 2021, February 2020; and Congressional Budget Office, The 2019 Long-Term Budget Outlook, June 2019. Note: Mandatory Programs include Social Security, the major federal health programs, and other entitlement programs, and offsetting receipts.

Source: https://www.taxpolicycenter.org, IRS, 12/31/1954  - 12/31/2019

  CPI Y/Y % Change  S&P 500 Operating P/E 10 Year Treasury Yield (%) Dividend Tax Rate (%0 Capital Gains Tax Rate (%) Nominal GDP (Y/Y % Change)
1950s 2.1 12.6 3 91 25 7.1
1960s  2.3 18.1 4.7 80.3 25.4 7
1970s 7.1 12.5 7.5 70.2 36 10.2
1980s 5.6 11.7 10.6 48.4 23.6 7.8
1990s  3 19.5 6.7 37 26 5.6
2000s 2.6 20.1 4.5 23.4 16.8 4
2010s  1.8 17.7 2.4 21.2 21.2 4.1
Average 3.5 16 5.6 53.1 24.9 6.6
Current 2.3 19.6 0.7 15 20 2.1

Source: CRFB as of 6/24/2020. GDP and Pre-crisis projections are based on data from the Congressional Budget Office's March 2020 budget projections. Post-crisis projections are based on the Congressional Budget Office's April 2020 near-term budget projections and its May 2020 Interim Economic Projections

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