US stock bulls beware.

The coming AI dire Tax gap.

It’s a foregone conclusion that AI will eliminate many jobs, especially white-color jobs. As its already axing, for one example, high paying computer code/software writers -and many more to come.  This will only exponentially accelerate in years to come.

The result is a coming huge shortfall in labor tax receipts -especially by developed economies like the US.  Note in the US, some 66% of total tax receipts in year 2024 (source Rand analysis), came from individuals paying, a so gigantic tax shortfall will increasingly emerge. This right at the same time when such governments are running enormous record budget deficits -while increasing military spending galore.  

Stock & bond markets are always forward looking and will see that such coming mega tax revenue shortfalls will only exacerbate the coming “crowding-out effect” in the debt markets and so increase the level of interest rates. Which by definition dents stock and bond prices.