More proof that the rich really are different: They SAVE money from a tax cut

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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.

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Comments (3)

Bob Haywood
McGraw Realtors - Owasso, OK

You're focusing only on the rich, Spencer.  Those who are not rich, such as myself, don't end up saving the money.  It goes towards the expenses of living.  So the argument may be out the window in regards to the wealthy, but it isn't for the common folks.

Sep 16, 2010 12:39 PM
Spencer Rascoff
Zillow - Seattle, WA

True Bob, but what's being debated is whether to extend the tax cuts for the rich. It's pretty much a foregone conclusion that Obama is going to keep the 2001 and 2003 tax cuts for the other 97%.

Sep 16, 2010 12:42 PM
Stephen Hodge
Chestnut Park Real Estate Limited, Brokerage - Cobourg, ON

You mean the rich LIKE their money? And what, in the middle of a recession where most investments are tenuous at best - if not outright risky - are those with money already going to put it in? Give the rich tax breaks for money they invest, make it tied to something. If I give a client a discount on their sale if they also buy through me, they don't get that discount until both of those things come true! If you want taxes to encourage investment, then make the policies about investment. Frankly, the cuts that have been in place were intended to do exactly what they did and everything else was just lip service to get enough of those without money to go along with it. End of day though, you want stuff (like roads, police, and other useful services) you gotta pay for them, so make the tax policies contigent, not based on a wing and a prayer!

Sep 16, 2010 12:48 PM