Earlier we wrote about Citi’s Steven Wieting calling the 2012 fiscal cliff ‘so ridiculously large,’ which is some language we’re not used to reading in Wall Street research.
In that same report, Wieting has a great chart which puts the issue in perspective.
Historically, the change in total personal taxes as a per cent of GDP moves roughly in line with the year-over-year change in GDP.
But in 2012, all that will change. As you can see, the expected surge in taxes as a percentage of GDP will almost certainly blow past any growth we’ll see at the same time.