How much is the stock market affected by taxes?

Wise investors ignore (or rather respond intelligently) to changes in tax law...

The reality is that the "net tax burden" on Americans is the lowest today it has been at any point since 1958; https://search.yahoo.com/search?p=lowest%20net%20tax%20burden%20since%201958&fr=yset_chr_cnewtab&type=newtab

Think you should focus on the cost of money and decide to invest or save. Search your real risk tolerance before to investing. Many people enjoy the sheer excitement of due diligence and greed. I do. Most just see their money as money. People are different.

"Aren't the taxes on capital gains also lowered and raised often" No they are not. Besides, stocks are a tax-deferred investment anyways (until one sells) not to mention that a huge amount of personal assets are held in retirement accounts where capital gains tax is a non-issue.

Corporate profits is what ultimately determines stock price. Investors are emotional and there are lots of blips along the way due to other things (or other anticipated things even if they haven't/don't materialize). But there's really no getting around that stock prices are tied to profit.

The problem with cutting taxes is that it's not "free money", it's borrowed money, and it has to be paid back with interest. That knowledge affects the speculative value of the market. Furthermore, some of that tax cut will go to savings and investments, and some will go toward buying imported goods, so it's not all going to stimulate businesses that sell stock.

Edit: If you cut spending along with taxes, then you have another problem. Government spending is mostly in US businesses (there are laws making it tough for them to buy from foreign businesses) but the public has no such restriction. So those businesses in the US that would have received the spending won't--meaning less money going/staying in the US economy than if that spending hadn't been cut.

This is all just the tiniest tip of the iceberg. Economics is extremely complex.

Good question.


I am a Republican but the Dow went up over 120% when both Clinton and Obama were in office. And went down when bush was in office.

It did go up some though when bush SR was in office.

I can't remember how well it did when Reagan was in office. I wasn't buying stocks then lol