Remember when Trump only paid $1,500 in federal taxes over the course of 11 years? Well, it turns out that lowering taxes on the super-rich only really helps the super-rich.
In other words, experts have just confirmed that trickle-down economics doesn’t really work. For individuals who support large tax breaks for the ultra-rich, one of their main arguments is typically the notion that cutting taxes for the uber-wealthy will have a “trickle-down” effect that would help society at large, since these cuts would supposedly allow the wealthiest folks to perhaps invest more in the economy or donate to charitable causes, according to Business Insider.
But a new, comprehensive study suggests otherwise: that tax cuts actually lead to more income inequality, and don’t improve employment or further economic growth.
A paper from researchers Julian Limberg of King’s College London and David Hope from the London School of Economics, called “The Economic Consequences of Major Tax Cuts for the Rich,” rigorously examines 50 years worth of tax cuts for the uber-rich in 18 countries, including the United States, Norway, and Japan from the years 1965 to 2015, and wrote that, “Our analysis finds strong evidence that cutting taxes on the rich increases income inequality but has no effect on growth or unemployment.” Limberg and Hope found that “Cutting taxes on the rich increases top income shares, but has little effect on economic performance.”
This study comes at a crucial time during the COVID-19 pandemic when countries across the globe are looking to fund COVID-19 relief bills. Argentina put in place a one-time “millionaire’s tax” that fewer than 100 of the country’s highest earners will pay, UK experts have called for a similar tax to be implemented, and dozens of multi-millionaires in the U.S. including Abigail Disney and Jerry Greenfield (the Jerry in Ben & Jerry!) have also asked for higher taxes on the ultra-wealthy to help with COVID-19 relief.