Report: Rich Americans Save Tax Cuts, Rather Than Spend

More

Sen. Mitch McConnell, the Senate Minority Leader, introduced legislation to extend tax cuts for the wealthiest Americans yesterday -- the same day Moody's Analytics published a study showing that the wealthiest Americans are more likely to save tax cuts than spend. 

The Moody's report is getting some buzz, but it can be said with a great deal of certainty that this study will change nothing. The Congressional Budget Office has repeatedly stated that income tax cuts for the wealthy are among the least effective forms of stimulus, because cash in the hands of the rich is more likely to be saved than cash in the hands of the poor. It's not like those reports changed the tenor of the debate.

The rebuttal from conservatives who would like to see the tax cut extended for a few years or longer is that lower tax rates on income and investment will lead to more income and more domestic investment, both good things. But this is exactly the kind of argument that is impossible to win. One side argues, correctly, that taxes on investment discourage investment. The other side argues, correctly, that there is no way to pay for anything resembling the kind of government Americans want without a progressive tax system. As readers know, I'm belong to the "we gotta tax where the money is" crowd, and if that makes me sound like Willie Sutton, then so be it.


>

Jump to comments
Presented by

Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

Get Today's Top Stories in Your Inbox (preview)

CrossFit Versus Yoga: Choose a Side

How a workout becomes a social identity


Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register. blog comments powered by Disqus

Video

CrossFit Versus Yoga: Choose a Side

How a workout becomes a social identity

Video

Is Technology Making Us Better Storytellers?

The minds behind House of Cards and The Moth weigh in.

Video

A Short Film That Skewers Hollywood

A studio executive concocts an animated blockbuster. Who cares about the story?

Video

In Online Dating, Everyone's a Little Bit Racist

The co-founder of OKCupid shares findings from his analysis of millions of users' data.

Video

What Is a Sandwich?

We're overthinking sandwiches, so you don't have to.

Video

Let's Talk About Not Smoking

Why does smoking maintain its allure? James Hamblin seeks the wisdom of a cool person.

Writers

Up
Down

More in Business

Just In