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Go ahead and jump! An increasing number of lawmakers and economists say the Van Halen song is a good theme for their increasing belief it's okay to take the plunge off the fiscal cliff. (AP image)

Nothing to fear! Go ahead and jump...off the fiscal cliff

BY Dave Ross  on December 4, 2012 @ 8:12 am (Updated: 8:29 am - 12/4/12 )

Still no fiscal cliff deal, but Republicans have put some real tax revenue on the table. And we are now seeing some economists questioning how scared we should really be about what might happen at midnight on December 31st.

Neither party wants the middle class tax increase, so that's going to go away. But what about the tax increase on the rich? This threat that investors will go Galt? America's Atlases will shrug, and the stock market will tank? That would be scary.

But now a few economists and at least one hedge fund manager are saying, wait. Let's think about this.

The higher taxes on investments only affect taxable investment accounts. But today, most Americans who invest have their money in 401Ks, which aren't taxed.

Today, less than 15 percent of American households have taxable investment accounts. So if taxes on investments go up, that means 85 percent of American households will see an effect of approximately zero.

Then you have foreign investors who don't pay taxes in the US, and insurance companies and pension funds which also don't pay taxes. As a result, there is at least one hedge fund manager who is saying the maximum effect on the stock market of just doing nothing might be around one percent.

Which would explain the the small but growing "Skyfall" caucus, and their pop metal theme, Van Halen's "Jump."

Where else are you going to put your money? Do you even bother to look at the rate on your savings account anymore?

As David Lee Roth sang, "go ahead and jump."

Dave Ross, KIRO Radio Talk Show Host
Dave Ross is co-host of The Ross & Burbank Show on KIRO Radio (weekdays 9-Noon) and never too far from the spotlight.
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Comments (43)


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  • roomtemp wrote...
    "_maximum effect on the stock market of just doing nothing might be around one percent. "
    December 5, 2012 8:09 am
    Umm, Dave? Didn't the market get about a 15-20% haircut during the last debt ceiling debate before congress finally got off their collective arses?

    Meh, go ahead. I'm out now anyway. They can have Dave's money. :-P

    "Where else are you going to put your money?"

    Preferably on something that isn't created from thin air or traded in nanoseconds with an HFT algorithm.

    "Do you even bother to look at the rate on your savings account anymore?"

    Nah, besides the paltry interest rates, the fed printing 40+ billion a month pretty much negates any reason to save dollars. Inflation will outstrip the interest. Grandmas and Grandpas with their little bit of interest money from savings are just collateral damage. No biggie.

    Enjoy your Oconomy...

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