Tag: trickle-down economics

Trickle-down economics refers to economic policies that disproportionately favor the upper tier of the economic spectrum, comprising wealthy individuals and large corporations. The policies are based on the idea that spending by this group will "trickle down" to those less fortunate in the form of stronger economic growth. The term has been used broadly by critics of supply-side economics to refer to taxing and spending policies by governments that, intentionally or not, result in widening income inequality; it has also been used in critical references to neoliberalism. However, the term does not represent any cohesive economic theory.

Similar criticisms have existed since at least the 19th century, though the term "trickle-down economics" was popularized in the U.S. in reference to supply-side economics and the economic policies of Ronald Reagan. Major examples of what critics have called "trickle-down economics" in the U.S. include the Reagan tax cuts, the Bush tax cuts, and the Tax Cuts and Jobs Act of 2017. Major UK examples include Liz Truss's mini-budget tax cuts of 2022. While economists who favor supply-side economics generally avoid applying the "trickle down" analogy to it and dispute the focus on tax cuts to the rich, the phrase "trickle down" has also been occasionally used by proponents of such policies. As of 2023, studies have not shown that there is a demonstrable link between reducing tax burdens on the upper end and economic growth.