Half a century of tax cuts for rich did not trickle down – study concludes

A study of fiscal policies in 18 countries 50 plus years has concluded that tax cuts for the rich do not trickle down and only really benefit people who are directly affected.

The paper, by David Hope of the London School of Economics and Julian Limberg of King's College London, found that slashing rates on high earners tends to breed inequality rather than address the path causes by stimulating business investment.

It may be the latest research to discredit economic theories popularised by Ronald Reagan which have became widely adopted among Conservative and Republican parties.

In 2021 Hillary Clinton accused Donald Trump of supporting the “most extreme” form of trickle-down economics together with his tax plan, calling it “trumped-up trickle-down” as a pun on his name.

During this year's general election the UK’s Labour Party also used a relevant video of recent Zealand politician Damien O’Connor which described the fiscal policy as “the rich pissing on the poor”.

Commenting on the findings, Hope gave reassurances to Chancellor Rishi Sunak who may need to consider taxing the greater rich in order to purchase the coronavirus crisis.

“Policy makers shouldn't worry that raising taxes on the rich to finance the financial costs of the pandemic will harm their economies,” he explained in an interview.

It indicate the economy could weather a one-off 5 per cent tax on wealth suggested for Britain a week ago by the Wealth Tax Commission, which may affect about 8 million residents.