Report: Rich Americans Save Tax Cuts, Rather Than Spend

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.


>

Presented by

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

Would You Live in a Treehouse?

A treehouse can be an ideal office space, vacation rental, and way of reconnecting with your youth.

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

Would You Live in a Treehouse?

A treehouse can be an ideal office space, vacation rental, and way of reconnecting with your youth.

Video

Pittsburgh: 'Better Than You Thought'

How Steel City became a bikeable, walkable paradise

Video

A Four-Dimensional Tour of Boston

In this groundbreaking video, time moves at multiple speeds within a single frame.

Video

Who Made Pop Music So Repetitive? You Did.

If pop music is too homogenous, that's because listeners want it that way.

More in Business

Just In