Case of the Missing Tax Receipts

This will be my last article for 2009. I wish everyone a prosperous and safe New Year. I really am a happy and positive person, unfortunately, writing about the markets and the economy exposes my bear side. Black Swans are for people who choose to keep their eyes shut.

I'm bearish about 2010 because the latest report from the US Census on state and Local Government taxes show the forth consecutive quarter of receipts being down. Transactional taxes are the DNA of economic activity. Bulls argue that unemployment is a lagging indicator. Taxes are a leading indicator.

"2009 Quarter 3

Third quarter 2009 (2009:3) tax revenue for state and

local governments, as compared with third quarter

2008 (2008:3), was down 6.7 percent, marking the

fourth consecutive quarter of negative growth. Tax revenue

for the quarter totaled $266.5 billion compared

with $285.6 billion reported for third quarter 2008.

Of the four largest tax categories only property tax

increased; general sales tax, individual income tax, and

corporate income tax all continued to decline in the

third quarter of 2009."

Here are the total numbers for the US:

Percentage Change from 2008:3 to 2009:3 for Selected State Government Tax Revenues1

State         General sales tax     Individual income tax     Corporate net income tax     Severance tax Documentary and stock transfer tax

United States . . . . . . . . . . –9.2         –11.6                 –23.2                 –63.3             –26.3

When real positive economic data appears, I will be the first to note it. Until then, I will continue to call balls, balls; and strikes, strikes.