Republicans continue to cling to their "trickle-down" economic theory. They claim that giving more to the rich will trickle down and help everyone. It has never worked. It just fattens the bank accounts of the rich, who do their best to make sure nothing trickles down.
Jennifer Rubin (in The Washington Post) calls it a scam - and she is right. Here's some of what she writes:
The claimed economic benefits of tax cuts for the rich don’t hold up under scrutiny. When Democrats deride tax cuts for the wealthiest as a budget buster and a vehicle for allowing the rich to get richer, Republicans often reply: “But look at the growth and jobs!” Actually, we have seen a steady stream of evidence debunking this rationale. . . .
Last July, NEC Director Lael Brainard laid out the overwhelming evidence that “trickle-down” economics — defined as “cutting taxes for big businesses and those at the top” — has been a bust.
“Economic inequality increased, many communities suffered from sustained disinvestment, and earnings growth for many Americans failed to keep pace with the cost of necessities like health care, housing, and education,” she said. “Investments in infrastructure and vital industries stagnated.”
This isn’t new evidence, either.A 2020 paper by David Hope of the London School of Economics and Julian Limberg of King’s College London examined “18 developed countries — from Australia to the United States — over a 50-year period from 1965 to 2015,” CBS News reported. “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.” It turns out that “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 there was one significant difference: “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.” Oops.
Well, what about the huge tax cuts passed by MAGA Republicans in 2017? Were those any different? “Mr. Trump’s tax cuts have lifted the fortunes of the ultra-rich,” the report found. “For the first time in a century, the 400 richest American families paid lower taxes in 2018 than people in the middle class, the economists found.”
But economic growth made up for this handout, right?! Not so fast. Wages for average Americans did not keep up with the cost of living. Worse, “Even before the pandemic, income inequality had reached its highest point in 50 years, according to Census data,” as CBS News reported. And, before Biden came into office, income inequality worsened as the pandemic hurt the less-well-off more severely than it did the rich.
A 2022 update by Hope and Limberg reiterated, “Our findings on the effects of growth and unemployment provide evidence against supply side theories that suggest lower taxes on the rich will induce labor supply responses from high-income individuals (more hours of work, more effort, etc.) that boost economic activity.” Instead, they confirmed there is “strong evidence that cutting taxes on the rich increases income inequality but has no effect on growth or unemployment.”. . .
Sold as a prosperity booster, trickle-down tax cuts for the very rich do not increase prosperity, growth or employment for the average American. This sop to the rich does increase the deficit and income disparity. By contrast, restoring the child tax credit and enacting a billionaire’s tax would continue to narrow the gulf between the very rich and everyone else.
Trickle-down economics is a scam. Renewing tax cuts for the rich that are due to expire at the end of 2025 would do about as much for you as a degree from Trump University.
