Because the alternative is even worse.
If the taskbar is not wide enough to display the entire word “Start”, then the word “Start” is hidden. To get it back, resize the taskbar wider until the word “Start” reappears.
This behavior is by design. From a design point of view, a partial word looks very broken.
Also, there is an apocryphal story of clipping text causing embarrassment during localization. The word “Start”, after being translated into some language, and then being clipped, turned into a rude word. (As an analogy, suppose the text on the Start button said “Start button”, but it got clipped to “Start butt”. Now you have to explain to people why they have to click on the “Start butt”.)
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