Tax cuts for the rich only benefit the rich.
History suggests that policies relying on “trickle-down economics” are destined to fail, and yet the idea, for some, still persists. David Hope explains why tax cuts for top earners only benefit the rich…
50 years of tax cuts for the rich failed to “trickle down.”
The study compared countries that passed tax cuts in a specific year, such as the U.S. in 1982 when President Ronald Reagan slashed taxes on the wealthy, with those that didn’t, and then examined their economic outcomes.
Per capita gross domestic product and unemployment rates were nearly identical after five years in countries that slashed taxes on the rich and in those that didn’t, the study found.
But the analysis discovered one major change: The incomes of the rich grew much faster in countries where tax rates were lowered. Instead of trickling down to the middle class, tax cuts for the rich may not accomplish much more than help the rich keep more of their riches and exacerbate income inequality, the research indicates.