I thought the results were fascinating. A few months ago, I asked readers, if we had to, which state should be booted from the union. The results were somewhat similar.

The Treasury received £10.35 billion in income tax payments from those paying by self-assessment last month, a drop of £509 million compared with January 2011. Most other taxes produced higher revenues over the same period.

Senior sources said that the first official figures indicated that there had been “manoeuvring” by well-off Britons to avoid the new higher rate. The figures will add to pressure on the Coalition to drop the levy amid fears it is forcing entrepreneurs to relocate abroad.

The self-assessment returns from January, when most income tax is paid by the better-off, have been eagerly awaited by the Treasury and government ministers as they provide the first evidence of the success, or failure, of the 50p rate. It is the first year following the introduction of the 50p rate which had been expected to boost tax revenues from self-assessment by more than £1billion.

I’m not a believer in the Laffer Curve, the idea that higher tax rates produce less revenue. I concede that it might occur at extremely high rates like 70%. However, I think it’s perfectly reasonable to see a short-term effect and I’d guess that’s probably what we’re seeing in Britain.

People respond to incentives. The rest is details.

There’s no reason to expect a long-term relationship to last. After all, we’re comparing a price index to a yield. But, for whatever reason, whatever causes investors to expect more inflation seems to be highly aligned with higher equity prices. Correlation, of course, doesn’t mean causation.

President Barack Obama is proposing to cut the corporate tax rate from 35 percent to 28 percent and wants an even lower effective rate for manufacturers, a senior administration official says, as the White House lays down an election-year marker in the debate over tax policy.

In turn, corporations would have to give up dozens of loopholes and subsidies that they now enjoy. Corporations with overseas operations would also face a minimum tax on their foreign earnings.

Over the last 40 years, corporate taxes have fallen as a percentage of federal revenues. I can’t say if this has a realistic chance of becoming law. I would think that fighting for corporations during an election isn’t a good idea.

Of course, corporations don’t pay taxes. A corporation is just a piece of paper. The companies pass the cost on to their customers. The benefit for the government is that it hides their taxes by imbedding it in a third-party’s prices.

On Friday, the stock closed at $62.48 which is very close to the top of its range. It seemed like the strange range would finally be broken. But yesterday, Walmart’s disappointing earnings knocked the shares back to $60.07.

By the way, Walmart’s sales rose by 5.8% to $122.29 billion. That means that Walmart averaged $1 million in sales. A minute. Also, despite what people may think of how corporations are run, Walmart’s profit margin was just 4.24%.

Earnings in the S&P 500 have more than doubled to $96.58 since 2009 and are projected to reach a record $104.28 this year, more than 11,000 analyst estimates compiled by Bloomberg show. The earnings yield, or annual profits divided by price, climbed to 7.1 percent, 5 percentage points more than the rate on 10-year Treasuries. That’s wider than in 97 percent of months in 50 years of Bloomberg data.

I think this analysis is basically sound, however, there are a few problems. For one, it says that stocks are cheap versus bonds. It doesn’t mean that stocks are cheap on an absolute level. In other words, it can mean that bonds are over-priced which I think it also true.

On a philosophical level, we should remember that all prices are relative. We’ve been trained to think that all prices are expressed in dollars, but that’s a bit of a mind trick. All prices are relative to each other — dollar bills are just the middleman.

Ideally, the earnings yield ought to be compared with rates longer then the 10-year bond. What’s interesting is that rates are unusually steep after ten years. The 20-year yield is currently 79 basis points over the 10-year, while the 30-year is 115 basis points above it.

The spread was last this wide in the four months before the S&P 500 (SPX) reached a 12-year low in March 2009, data compiled by Bloomberg show. The benchmark gauge for American equities has increased 101 percent since then, including an 8.3 percent increase in 2012, the best start to a year since 1997.

Low valuations and signs of recovery have failed to lure individuals back to equities. Stocks are trading at a 14 percent discount to their average price-earnings ratio over the past five decades. The multiple has been stuck below the mean of 16.4 times earnings since May 2010, the longest stretch below the average since the 13 years beginning in 1973, data compiled by Bloomberg show.

(…)

Capital investments surged in 2006 as the total debt-to- assets ratio in the S&P 500 was climbing to 38.8 in the third quarter of 2007, the highest point since at least 1998, data compiled by Bloomberg show. The ratio is about 32 percent lower now. Companies spent the past three years paying down debt and cutting costs, boosting the S&P 500 profit margin to 13.8 percent, compared with 8.3 percent in 2009, the data show.

S&P 500 companies increased cash and equivalents for 12 straight quarters to $998.6 billion in the third quarter, 60 percent more than in September 2007, just before the index reached an all-time high of 1,565.15, according to S&P. The total excludes financial, utility and transportation companies.

I caution investors that while this analysis is very useful, don’t get too caught up in models. All this is based on projections. Outside of a few months, forecasters don’t really have a good idea what’s going to happen. They’re usually good at predicting that an existant trend will continue. But they’re not so good at spotting the turning points which is the most important part.

Greek Crisis Raises New Fears Over Credit-Default Swaps

New Bailout Is a Reprieve for Greece, but Doubts Persist

A Battle for Mongolia’s Copper Lode

Oil Trades Near 9-Month High After Iran Denies Access to UN Team

Obama Offers to Cut Corporate Tax Rate to 28%

Watchdog Targets Overdraft Charges

High-End Retailers Report Strong Profits, but Walmart Still Struggles

Dell Earnings and Forecast Fall Short of Wall St. Views

Kraft’s Net Rises 54% on Higher Prices

Alibaba Offers to Take Web Portal Unit Private

Ford Pours $3.8 Billion into Pension Plan, Eyes Shift to Bonds

Peugeot in Alliance Talks After Report of GM Discussions

Shell Offers to Buy Cove Energy for $1.6 Billion

Joshua Brown: What a Waste.

Paul Kedrosky: The Unexpected Physical Consequences of Technology

Every Face Punch in Road House!

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Today’s market was split between large-cap stocks which fared the best and small-cap stocks which fared the worst. The small-cap Russell 2000 was down 0.66% today while the S&P 500 was up 0.98 points or 0.07%. The mega-cap S&P 100 was up 0.27%.

Interestingly, shares of Apple ($AAPL) gained $12.73 or 2.54%. That’s a market cap gain of $11.87 billion. Each point in the S&P 500 is worth $9.05 billion. That means that Apple’s gain was worth 1.31 points in the S&P 500. The index gained 0.98 points so without Apple, the index would have closed just slightly lower today.

In Buy List news, Johnson & Johnson‘s ($JNJ) CEO resigned:

William C. Weldon, who presided over Johnson & Johnson during one of the most tumultuous periods in its history, will step down as chief executive in April, the company announced Tuesday.

Alex Gorsky, head of the medical device and diagnostics business, will take over as chief executive. Mr. Weldon will remain as chairman.

The news of Mr. Weldon’s retirement comes as Johnson & Johnson has struggled to emerge from a swarm of product recalls, manufacturing lapses and government inquiries that tarnished the name of a company that was once one of the nation’s most trusted household brands. In 2010, the company recalled millions of bottles of liquid children’s Tylenol and other medications, as well as tens of thousands of artificial hips and millions of contact lenses.

Much of the blame for Johnson & Johnson’s stumbles fell on Mr. Weldon, the son of a Broadway stagehand and seamstress who became chief executive in 2002 after spending his entire career at the company. Critics said the company’s once-vaunted attention to quality slipped under his watch. The company said in a statement that neither Mr. Weldon nor Mr. Gorsky was available for comment.

Oracle ($ORCL) was downgraded by JMP Securities. They’re paring back their earnings estimates but they add that the stock is not unreasonably valued.

WSJ‘s “Market Beat” notes that DirecTV ($DTV) may soon join the streaming bandwagon.

I’ll also include my analysis of the market and what to expect from Wall Street in the days ahead. Plus, you can read my take on the stocks on our market-beating Buy List.

I’m happy to bring this service to all my loyal readers. Best of all, the e-letter will arrive right in your Inbox and it’s completely free. Sign up today!

I hope this will be different from the eight previous times we’ve broken 13,000. (That’s not an exaggeration. From April 2007 to May 2008, the Dow broke through 13,000 on eight different occasions going by the daily close.) If the Dow had merely kept pace with inflation over the last 12 years, it would be at 13,837 today.

The S&P 500 is currently up to 1,366 which would be a post-crash high. Today could be the highest close since June 5, 2008. That was 44.5 months ago.

On Friday, the Wilshire 5000 Total Return Index, which is about the broadest index possible, closed at its highest level since October 2007. That index includes dividends. By my math, we need a jump of 0.89% to make an all-time high. The Wilshire 5,000 is up 0.33% so far today.