Or maybe the market anticipates that nothing will be done. Taxes will go up and spending will be sequestered. Our deficit will not be solved, but will be restrained. I really don't think tax rates matter as much as spending restraint and trying to close the gaping deficit we're facing. To frame the whole debate in terms of tax rates exhibits gross tunnel vision. You're framing the whole debate poorly. Pick a reasonable level of gov't spending relative to GDP, then cap spending at that level and design a tax code to raise the revenue. I'd say 15% or less should be enough, but 19% is realistic. Right now we're taxing at closer to the 15% level but spending at closer to 25%.