Assuming a Democratic President and Congress, increased taxes on investments via capital gains and dividends seem like a given. When dividends and capital gains were reduced in 2003, the media hyped how dividend stocks would get more investor interest and that the reduction in capital gains tax would increase stock prices in general. Academics and politicians and Buffett have debated how much of an impact these specific changes actually would have or did have.   No matter what the real impacts are…this has largely just become a political economics issue of supplysiders vs. the tax and spend crowd or rich vs. poor or progressive vs. regressive or Republican vs. Democrat.  I am not interested in that.  The fact is that the S&P 500 closed at 950.12 on May 28, 2003(the day President Bush signed it) and now it’s 1279.  If you believe in discounting and pricing things in before they happen, then given that its passage in Congress took a few months, it almost looks like the dividend and tax cut changes set the bottom in the market at the end of the last bear.   From reading my stuff over the past few years, you know I don’t assign one thing as a singular cause for longer term market movements and I am not impressed by the claims that the market is as great of a forward discounting mechanism as smarties will tell you and I don’t believe that taxation should be your sole reason for making investment decisions and I am sick and tired of having economics/capitalism confused with politics.  Regardless of the causation, taxes were lowered and stocks increased.   The Dems are likely to win in November.  It will be interesting to evaluate taxation causation in the other direction.