Trickle-down

Since the 1980s, when President Ronald Reagan led a conservative revolution in American politics, so-called trickle-down economic policies have been followed by both political parties, but most often by Republicans. 

Trickle-down economics is based on the idea that the richest Americans are the most successful, are good at generating profits, and use their wealth to create jobs for the rest of us. 

Politicians advocating for trickle-down economic approaches claim that if we allow the richest members of society to keep more of their wealth, those individuals will invest their money wisely, creating jobs, new products, and benefiting everyone. The wealth, they argue, will eventually "trickle down" to the rest of us. A rising tide, as the saying goes, lifts all boats. So by making the rich even richer - reducing taxes on the wealthiest Americans and corporations - advocates of trickle-down economics argue, we actually all benefit and our overall standard of living will increase.

Perhaps unsurprisingly, cutting taxes on the rich doesn't seem to lift all boats - the data we have shows that Americans do not all benefit when taxes are cut on the richest members of our society. Instead, inequality grows as the gap between the richest and the poorest Americans widens, and the government is less able to spend tax revenue on the social supports that millions of Americans depend on to survive. 

In fact, the richest Americans don't seem to spend more money on creating jobs or paying their workers more money when they get tax cuts. Instead they tend to siphon their extra income to tax havens outside the United States - in places like Panama - where they will pay little or no tax, and where the money does nothing to benefit American workers at all. 

Who benefits most from trickle-down economics? Who do tax cuts benefit most?