TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Friday, January 28, 2011

Buchanan: Tax Cuts for the Poor Stimulate the Economy More Than Tax Cuts for the Rich

Neil H. Buchanan (George Washington), What Are They Teaching in Our Schools?!:

A friend of mine is enrolled in a certificate program at a top-10 U.S. business school. ... The instructor [in the "Investments" course] ... made some passing comment about how tax cuts for the rich stimulated the economy more than tax cuts for the poor. ...

Professor Privilege made three points, each of which I consider presently:

  1. "He said rich people are always spending. They go on vacation even when times are tough." ...
  2. "He also said that poor people have so much credit card debt anything extra they get just gets plowed into debt payments and doesn't really stimulate any new purchases." ...
  3. "And finally, that rich people just have so much more money than poor people, that anything affecting rich people has a much bigger total effect on the economy." ...

I wish that I could say that I am surprised by my friend's story. One would hope that professors of business would know better than to spout such nonsense. It is possible, of course, that the professor in question actually knows that he is lying, but chooses to do so for ideological reasons. There really is no reason, however, to think that he has ever learned the basic economics necessary to understand this. Being good at, say, describing the relative advantages of debt and equity in a client's portfolio does not require any knowledge of macroeconomics. And every other incentive in such a person's life pushes him in the direction of believing that which is reassuring: helping poor people is neither necessary nor useful. Nothing that penetrates such a person's consciousness will ever allow him to believe otherwise.

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The 'reply' was a waste of time to read. There was no actual critique other than "that's stupid" (not much of an argument) and an ad hominem attack.

Posted by: peregrine | Jan 28, 2011 11:22:53 AM

Agreed, what is needed by both sides is data, studies, analysis, etc, you know, the stuff that objective academic research is made of.

On the other hand, how did those tax cuts for the rich in the Bush administration work out, macroeconomic wise?

Posted by: Sid | Jan 28, 2011 12:18:21 PM

You might want to read the actual article instead of the snippet posted above, before opening your mouth and proving yourself an idiot.

Posted by: Anonymous | Jan 28, 2011 12:39:37 PM

I believe: "It is better to remain silent and thought to be a fool than open one's mouth [pen, keyboard] and remove all doubt."

Posted by: tax guy | Jan 29, 2011 5:45:04 AM

Ummm.......... what about the middle class??-Oh there isn't one anymore!

Posted by: Nick Paleveda MBA J.D. LL.M | Jan 29, 2011 9:34:36 AM

To Anonymous: Thanks for your ever-so-polite response. My comment was more a reflection of the posting, and thus a criticism of Prof Caron, than of the article itself. If the posting, and its selection from the article, makes the article sound foolish and shallow, then, because I trust that Prof Caron has selected fairly, why should I read the article?

Posted by: peregrine | Jan 29, 2011 4:40:33 PM