Another factor in the tax cut for rich people analysis is the tendency of government to expand when rich people don't have to pay for it. The Cato Institute published a study documenting this, somewhat to their surprise, a few years ago. Thing is, the wealthy have great influence on the size of government - when they have to pay for it, they keep it better controlled. Consider the likely fate of the Iraq War launch, or the Patriot Act bureaucracy expansion, had the legislation proposing to enable them been accompanied by proposed tax increases on the wealthy sufficient to pay for them. An expansion of government can be good for the economy, if carefully arranged, but in general governance is a cost to be minimized from an economic point of view.