Readers of this blog know that I find tax policy interesting (lame, I know). Specifically, the ability (and sometimes inability) of tax policy to affect behavior. I've blogged about it extensively, most recently here.
Well today there's a new interesting study about the impact of the 2001 and 2003 tax cuts on our behavior, and the findings are a little surprising and controversial, and have big implications on the current debate about whether to extend those tax cuts. Moody's reports that the wealthiest Americans saved rather than spent their tax savings from those tax cuts. If true, the primary argument for extending the tax cuts is out the window. It won't really help the economy, it will just help the balance sheets of the rich.