If Bush-era tax-bracket reductions disappear, so will bank deposits, according to Market Rate Insight.
Bank deposits will fall by $200 billion for each 1% increase in the ratio between tax and personal income. In August, the national ratio was 9.23%. In June 2001, prior to President Bush’s tax cuts, the ratio was 14.76%. A return to that level would mean banks would collectively lose more than $1 trillion in deposits, putting an additional strain on economic recovery. As of September, banks’ deposits totaled $7.6 trillion, according to MRI.
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