According to the analysis of this article, the recent tax rising would probably not be able to increase as much savings as it predicted. First, it points out that tax is only one factor that influence stock values, whose impact on the market is limited.
Moreover, it is analyzed that the tax hikes will actually have a negative influence on the savings, because many investors may regard the threat of higher taxes as a catalyst to bail. And, to investors with a longer-term focus, the higher tax does not have a lot of sense to them. Also, the higher taxes are not likely to have a profound influence on market participants’ broad investing habits.
I could see higher taxes having a negative effect on people investing in the economy. People probably wont want to have less money all of a sudden, and then decide to spend that money on the purchase of new stocks. People would probably want to have there money more liquid then in the market.
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