GOIH Capital Markets: Economic Report

Our quantitative models are indicating a short fall in tax revenue due to the subprime credit crisis. We programmed our models to search for an anomaly in revenue to taxing authorities and the results are as follows. Because the consumer is under a full scale assault, consumer discretionaries, where sales taxes are charged are in decline. See (Wal-mart) WMT and (Target) TGT estimates for growth. The consumer is restricting their purchases to consumer essentials, i.e., groceries and staples, where sales taxes usually not collected; hence taxing authorities are seeing a decline in revenue and will have to go into the debt market to raise short term financing.

Also because of the large number of foreclosures, property tax revenue is in a decline causing further pressure on taxing authorities.