Do the Rich Spend Tax Cuts?

While lower income people probably do spend a larger percentage of their marginal income on consumption in the short run, the income of higher income people usually gets spent, either directly on physical investment or indirectly on investment after financial intermediation. Buying stocks or bonds or depositing income in a bank or other financial intermediary doesn’t mean money not spent. It just means money not spent in the first round on consumption. It is usually spent in later rounds on investment.