Wall Street’s Tax Collection Estimates Hint at Liquidity Drain

Wall Street strategists expect last year’s financial market gains to fuel a robust tax season for the US government, potentially leading to a drawdown of liquidity just as politicians wrestle over the debt ceiling.

Wrightson ICAP’s low-conviction forecast expects an 11% increase in nonwithheld income tax collections during the April and May period from the previous year, down from what would’ve been a 16% bump had the Internal Revenue Service not granted filing extensions for regions hit by natural disasters, such as the Los Angeles wildfires. JPMorgan Chase & Co. strategists led by Teresa Ho estimate money-market funds could lose ...