Fifty Years of Tax Cuts for Rich Didn’t Trickle Down, Study Says

Tax cuts for rich people breed inequality without providing much of a boon to anyone else, according to a study of the advanced world that could add to the case for the wealthy to bear more of the cost of the coronavirus pandemic.


The paper, by David Hope of the London School of Economics and Julian Limberg of King’s College London, found that such measures over the last 50 years only really benefited the individuals who were directly affected, and did little to promote jobs or growth.


“Policy makers shouldn’t worry that raising taxes on the rich to fund the financial costs of the pandemic will harm their economies,” Hope said in an interview.


That will be comforting news to U.K. Chancellor of the Exchequer Rishi Sunak, whose hopes of repairing the country’s virus-battered public finances may rest on his ability to increase taxes, possibly on capital gains — a levy that might disproportionately impact higher-earning individuals.


It would also suggest the economy could weather a one-off 5% tax on wealth suggested for Britain last week by the Wealth Tax Commission, which would affect about 8 million residents.

The authors applied an analysis amalgamating a range of levies on income, capital and assets in 18 OECD countries, including the U.S. and U.K., over the past half century.

Their findings published Wednesday counter arguments, often made in the U.S., that policies which appear to disproportionately aid richer individuals eventually feed through to the rest of the economy. The timespan of the paper ends in 2015, but Hope says such an analysis would also apply to President Donald Trump’s tax cut enacted in 2017.

“Our research suggests such policies don’t deliver the sort of trickle-down effects that proponents have claimed,” Hope said.



15 thoughts on “Fifty Years of Tax Cuts for Rich Didn’t Trickle Down, Study Says

    • Hello Shira. Incredible that the Republicans get away with running the same tax cut for the wealthy every few years and the Republican base buys it. The poorest people are sure if they just give a bit more of the treasury to the wealthy then they also will somehow get more money. If you look at history, the times that the US economy was doing the best and that the middleclass was created and grew was when business and corporations / the wealthy paid the highest tax rates. They still became wealthy but they also were required to lift everyone else also. We need to return to those days. At one point the marginal tax rate was 91% and the money was flowing in all sectors of the US, we were able to build the interstate road system. Hugs

      Liked by 1 person

      • “history, the times that the US economy was doing the best and that the middleclass was created and grew was when business and corporations / the wealthy paid the highest tax rates. They still became wealthy but they also were required to lift everyone else also.”
        I recall that being about the time of the early Eisenhower administration??

        Liked by 1 person

        • Hello Shira. Yes about the 1950’s. And the drop off is dramatic after 1980. Reagan was the start of shifting the entire burden of funding the government on to the lower incomes and poor. Those least able to afford it were required to pay more of their income while those who could easily afford to pay more were not required to do so. It was a complete steal of the country and public treasury by the wealthy. It created the mooching wealthy class.

          The wealthy believe that government must always serve the upper class and never work for the lower class. This creates a lower class poor dependent on the meager scraps the wealthy are willing to offer, and to accept any working conditions simply to get enough to eat or have shelter of some kind. It takes the country back to the days living was a struggle for survive for most people but the wealthy lived lives of opulence and indulgence. Hugs

          Liked by 1 person

            • Hello Shira. Yes the wealthy want to take us back to that age. It was FDR and the new deal in 1929 that stopped most of that cooperate business power. Businesses have hated the increased government control over them and the power it gave workers so starting in about the 1970’s they made a huge push to over turn the entire concept of the new deal. They have about succeeded. We need a new FDR and a new new deal, with the inspiring rhetoric that can over come the indoctrination of the right wing media that anything benefiting the people is somehow evil and socialist / communist. Hugs

              Liked by 1 person

  • Scottie, this is consistent with four earlier studies. The last one was done by the Congressional Research Service, a nonpartisan arm of Congress, released in 2012. The New York Times reported that Senator Mitch McConnell had the report buried, so as not to harm Mitt Romney’s election hopes. Keith

    Liked by 3 people

    • Hello Keith. I did not know that. So let me ask the question that follows, if the Republicans knew this was documented to not work why did they keep pushing it every time they got a chance? It seems clear they were openly lying by claiming it was needed to stimulate the economy, especially the last one during a great economy. They knew it would hurt the poor and lower incomes, yet it seems they did not care. How to square that with their rhetoric of fiscal responsibility? Hugs

      Liked by 1 person

      • Scottie, the old rule of thumb is nonpartisan groups like the Congressional Research Service and Congressional Budget Office are brilliant when their math agrees with your idea and biased when they don’t. I have met someone who used to work with the CBO and now is at the Federal Reserve. He said these economists at the CBO do their best to get their forecasts as right as they can. It is still a forecast, but you want to be sound.

        True story, I had an argument with a staff member from a Congressman’s office who was giving me the party line that “the tax cut will pay for itself.” At its very best, the CBO said a tax cut may pay for 25% or so of the revenue lost, or about a 1/4. I told the staff member telling people anything that will pay for itself is false advertising. He did not care for that and told me how the CBO was often wrong. I said they are forecasting things which will of course be off, but they do their best to get it right, which is more than I can say for what you just told me. Keith

        Liked by 1 person

        • Hello Keith. I get angry when people malign public service workers. I do not understand why people think government workers who work really hard in low paying jobs ( compared to industry jobs ) are so awful. People want to have these people work for free and have no benefits. it makes no sense. Hugs


  • Ah, The old supply-side economic plan. It never worked under the other name and it never worked under this name. Giving tax breaks and deregulating industry and capitalism results in richer industry and capitalism and society left just holding that empty bag the promises came in.

    Liked by 1 person

    • Hello Cagjr. Yes very true. I have to give the Republicans credit, they are able to sell that discredit shown to be a scam idea every few years or any time they get in charge. They have managed to take public money from the treasury and give it to the wealthy while telling the poor that they have to tighten their belts and not ask for anything because the country has no money. Hugs


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