View source for Trickle-down economics

{{Short description|Controversial political term}}
{{use mdy dates|date=January 2021}}
[[File:President Ronald Reagan addresses the nation from the Oval Office on tax reduction legislation.jpg|thumb|[[Ronald Reagan]]'s economic policies, dubbed "[[Reaganomics]]" by opponents, included large tax cuts and were characterized as trickle-down economics. In this picture, he is outlining his plan for the [[Economic Recovery Tax Act of 1981]] from the [[Oval Office]] in a televised address, July 1981.]]
{{Neoliberalism sidebar|economics}}
 	
'''Trickle-down economics''', also known as '''trickle-down theory''' and the '''horse-and-sparrow theory''',<ref>{{cite web |last=Duerringer |first=C. M. |date=2019 |title=Class Structure and the Movement of Capital: The Rhetoric of Supply Side Economics |url=https://rwsgradexam.pbworks.com/w/file/fetch/138387093/DuerringerRhet_TrickleDown%20Econ.pdf}}</ref> is a term, most-often used pejoratively, to describe government economic policies that disproportionately favor the upper tier of the economic spectrum (wealthy individuals and large corporations). The term has been used broadly by critics of [[supply-side economics]] to refer to [[Fiscal policy|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]].<ref>{{Cite book |last1=Springer |first1=Simon |url=https://books.google.com/books?id=M5qkDAAAQBAJ&pg=PA3 |title=Handbook of Neoliberalism |last2=Birch |first2=Kean |last3=MacLeavy |first3=Julie |date=2016-07-07 |publisher=Routledge |isbn=978-1-317-54966-6 |language=en}}</ref>
These critics reject the notion that spending by this elite group would "trickle down" to those who are less fortunate and lead to economic growth that will eventually benefit the economy as a whole.<ref name=Lockwood>{{cite web |last1=Lockwood |first1=Benjamin |last2=Gomes |first2=Joao |last3=Smetters |first3=Kent |last4=Inman |first4=Robert |title=Does Trickle-down Economics Add Up – or Is It a Drop in the Bucket? |url=https://knowledge.wharton.upenn.edu/article/trickle-economics-flood-drip/ |website=Knowledge at Wharton |publisher=A business journal from the Wharton School of the University of Pennsylvania |access-date=1 February 2023 |archive-date=February 1, 2023 |archive-url=https://web.archive.org/web/20230201202510/https://knowledge.wharton.upenn.edu/article/trickle-economics-flood-drip/ |url-status=live | quote=Kent Smetters, Wharton professor of business economics and public policy, says that trickle-down economics is a term created to disparage supply-side economics. ... Many others have pointed out the folly of using the term — that no real economic model or serious school of thought stands behind what has long been a term of art at the intersection of politics and media. Part of the problem is that “trickle down” lacks a universally understood meaning. Smetters says the idea of tax breaks for the rich eventually producing benefits to the poor has never been part of supply-side economics. }}</ref>

While criticisms have existed since at least the 19th century, the term "trickle-down economics" was popularized by [[Democratic Party (United States)|Democrats in the US]] to derogate [[Reaganomics]] and its reduction in the top marginal tax rates.<ref name="Noah2011">{{cite web |last=Noah |first=Timothy |author-link=Timothy Noah |date=2011-09-21 |title=New Republic: How Did Trickle-Down Get Acceptable? |url=https://www.npr.org/2011/09/21/140662014/new-republic-how-did-trickle-down-get-acceptable |access-date=2024-01-15 |website=[[NPR]] | quote=q=In 1981, when President Ronald Reagan lowered marginal tax rates, his main purpose was to drop the top rate from 70 percent to 50 percent ... But it was important not to admit as much, because that would be "trickle-down economics." That was the derisive term Democrats attached to Reaganomics. }}</ref> 

Major examples of what critics have called "trickle-down economics" in the US include the [[Reagan tax cuts]],<ref>{{cite journal |last1=Redenius |first1=Charles |title=Thatcherism and Reagonomics: Supply-Side Economic Policy in Great Britain and the United States |journal=Journal of Political Science |date=April 1983 |volume=10 |issue=2, Article 4 |url=https://digitalcommons.coastal.edu/cgi/viewcontent.cgi?article=1104&context=jops |access-date=9 February 2023 |publisher=The Athenaeum Press |issn=0098-4612 |archive-date=December 2, 2022 |archive-url=https://web.archive.org/web/20221202223208/https://digitalcommons.coastal.edu/cgi/viewcontent.cgi?article=1104&context=jops |url-status=live }}</ref> the [[Bush tax cuts]], and in UK include [[Margaret Thatcher]]'s economic policies in the 1980s and [[Liz Truss]]'s [[September 2022 United Kingdom mini-budget|mini-budget tax cuts of 2022]].<ref name="lis truss favours" /><ref>{{cite news |last=Schomberg |first=William |date=September 7, 2022 |title=UK heads for return to 'trickle-down' economics under low-tax Truss |url=https://www.reuters.com/world/uk/uk-heads-return-trickle-down-economics-under-low-tax-truss-2022-09-07/ |access-date=January 15, 2025 |work=Reuters}}</ref>

== History ==
[[File:WilliamJBryan1902.png|thumb|150px|left|[[William Jennings Bryan]] used a similar phrasing ("leak through") to characterize his opponents who supported the [[gold standard]] in his [[Cross of Gold speech]] in 1896{{ r | Wilson | Baker | Safire}} ]]

In 1896, United States [[Democratic Party (United States)|Democratic]] presidential candidate [[William Jennings Bryan]] claimed in his [[Cross of Gold speech]] that his opposition based their policies on the idea that the success of the rich would "leak through" to the lower classes, stating: "There are those who believe that, if you will only legislate to make the well-to-do prosperous, their prosperity will leak through on those below."<ref name=Wilson> Wilson, Thomas Frederick. 1992. ''[https://books.google.com/books?id=VIAbb1cKqp4C&pg=PA172 The Power "to Coin" Money: The Exercise of Monetary Powers by the Congress] {{Webarchive|url=https://web.archive.org/web/20230311191825/https://books.google.com/books?id=VIAbb1cKqp4C&pg=PA172&dq= |date=March 11, 2023 }}''. Armonk, New York: M. E. Sharpe. p. 172. {{ISBN|0873327942}} quote=In his speech Bryan charged that the opposition grounded its policies on the concept that the prosperity of the well-to-do would (in an early version of the "trickle-down" theory) "leak through" to those below, and claimed that [[bimetallism]] would restore the money of the Constitution.</ref><ref name=Baker >Baker, Andrew, David Hudson, and Richard Woodward. 2005. ''[https://books.google.com/books?id=TxaAAgAAQBAJ&pg=PA26 Governing Financial Globalization: International Political Economy and Multi-Level Governance] {{Webarchive|url=https://web.archive.org/web/20230311191826/https://books.google.com/books?id=TxaAAgAAQBAJ&pg=PA26&dq= |date=March 11, 2023 }}''. London; New York: Routledge. p. 26. {{ISBN|9780203479278}}.</ref><ref name=Safire />

In 1932, humorist and social commentator [[Will Rogers]] wrote a column criticizing [[Herbert Hoover|Herbert Hoover's]] policies and approach to [[The Great Depression]] and stated: "The money was all appropriated for the top in the hopes that it would trickle down to the needy. Mr. Hoover was an engineer. He knew that water trickles down. Put it uphill and let it go and it will reach the driest little spot."<ref name="Rogers_11/26/1932">{{Cite news |last=Roger |first=Will |date=November 26, 1932 |title=Will Rogers Explains That Money, Unlike Water, Always Trickles Up |work=[[The St. Louis Star and Times]] |url=https://www.newspapers.com/clip/105123031/trickle-down-economics-origin/ |access-date=July 7, 2022 |archive-date=July 7, 2022 |archive-url=https://web.archive.org/web/20220707053712/https://www.newspapers.com/clip/105123031/trickle-down-economics-origin/ |url-status=live }}</ref> In 2007, political commentator [[William J. Bennett]] credited Rogers for coining the term "trickle down" and observed its persistent use throughout the decades since.<ref>{{cite book |last1=Bennett |first1=William J. |title=America: The Last Best Hope |isbn=978-1595551115 |url=https://books.google.com/books?id=PLP5U-M8dhoC&q=trickle |publisher=Harper Collins |page=78 |year=2007 |quote=Will Rogers referred to the theory that cutting taxes for higher earners and businesses was a "trickle-down" policy, a term that has stuck over the years. |access-date=February 18, 2023 |archive-date=March 11, 2023 |archive-url=https://web.archive.org/web/20230311191825/https://books.google.com/books?id=PLP5U-M8dhoC&q=trickle |url-status=live }}</ref>

In 1983, [[H. W. Arndt]] wrote that Indian nationalist and statesman [[Jawaharlal Nehru]] may have been the first to use the term in an economic (rather than political context) when he stated in 1933 "the exploitation of India and other countries brought so much wealth to England that some of it trickled down to the working class and their standard of living rose."<ref>The "Trickle-Down" Myth, [[Heinz Arndt|H.W. Arndt]], Economic Development and Cultural Change, Oct., 1983, Vol. 32, No. 1 (Oct., 1983), pp. 1-10, UCP, https://www.jstor.org/stable/1153421 {{Webarchive|url=https://web.archive.org/web/20221010184239/https://www.jstor.org/stable/1153421 |date=October 10, 2022 }}</ref>

[[Samuel Rosenman]], a Democratic presidential speechwriter under [[Franklin D. Roosevelt]] and [[Harry Truman]], and coiner of the term "[[New Deal]]", wrote that "trickle down policies" had been prevalent in American government since 1921.<ref>{{Cite book|url=https://books.google.com/books?id=N9TiWUk6TqUC|title=The Forgotten Man: A New History of the Great Depression|last=Shlaes|first=Amity|date=May 27, 2008|publisher=Harper Perennial|isbn=9780060936426|pages=128|language=en|access-date=September 6, 2022|quote=The philosophy that had prevailed in Washington since 1921, that the object of government was to provide prosperity for those who lived and worked at the top of the economic pyramid, in the belief that prosperity would trickle down to the bottom of the heap and benefit all.|archive-date=March 3, 2021|archive-url=https://web.archive.org/web/20210303000016/https://books.google.com/books?id=N9TiWUk6TqUC|url-status=live}}</ref> In 1969, after leaving the [[President of the United States|presidency]], Democrat [[Lyndon B. Johnson]] alleged "[[Republican Party (United States)|Republicans]] ... simply don't know how to manage the economy. They're so busy operating the trickle-down theory, giving the richest corporations the biggest break, that the whole thing goes [[to hell in a handbasket]]."<ref>{{cite web |url=https://www.theatlantic.com/past/docs/issues/73jul/janos.htm |title=The Last Days of the President  |first=Leo|last=Janos|work=The Atlantic |date=July 1973 |access-date=March 12, 2017|archive-date=July 1, 2013|archive-url=https://web.archive.org/web/20130701093315/http://www.theatlantic.com/past/docs/issues/73jul/janos.htm|url-status=live}}</ref>

Ronald Reagan launched his 1980 campaign for the presidency on a platform advocating for [[supply-side economics]]. During the [[1980 Republican Party presidential primaries]], [[George H. W. Bush]] had derided Reagan's economic approach as "voodoo economics".<ref>{{Cite web |last=Wiseman |first=Paul |title=Trickle-down economics gets another try |url=https://www.detroitnews.com/story/news/politics/2017/11/17/taxes-trickle-economics/107795832/ |access-date=2022-10-18 |website=The Detroit News |language=en-US |archive-date=October 18, 2022 |archive-url=https://web.archive.org/web/20221018190311/https://www.detroitnews.com/story/news/politics/2017/11/17/taxes-trickle-economics/107795832/ |url-status=live }}</ref> Following Reagan's election, the "trickle-down" reached wide circulation with the publication of "The Education of David Stockman", a December 1981 interview of Reagan's incoming [[Office of Management and Budget]] director [[David Stockman]], in the magazine [[The Atlantic|Atlantic Monthly]]. In the interview, Stockman expressed doubts about [[supply side economics]], telling journalist [[William Greider]] that the [[Economic Recovery Tax Act of 1981|Kemp–Roth Tax Cut]] was a way to rebrand a tax cut for the top income bracket to make it easier to pass into law.<ref name=atlantic-stockman /> Stockman said that "It's kind of hard to sell 'trickle down,' so the supply-side formula was the only way to get a tax policy that was really 'trickle down.' Supply-side is 'trickle-down' theory."<ref name=atlantic-stockman>[https://www.theatlantic.com/magazine/archive/1981/12/the-education-of-david-stockman/305760/?single_page=true "The Education of David Stockman"] {{Webarchive|url=https://web.archive.org/web/20201227204043/https://www.theatlantic.com/magazine/archive/1981/12/the-education-of-david-stockman/305760/?single_page=true |date=December 27, 2020 }} by William Greider</ref><ref>William Greider. ''The Education of David Stockman''. {{ISBN|0-525-48010-2}}.</ref><ref>{{cite journal|last=White|first=Michael|title=Creative statistics: the Laffer Curve and taxation incentives.|journal=Journal of Australian Political Economy, the|issue=14|date=1983|pages=63–76}}</ref> Reagan administration officials including [[Michael Deaver]] wanted Stockman to be fired in response to his comments, but he was ultimately kept on in exchange for a private apology.<ref>{{cite web | title=David Stockman's famous trip to the woodshed was prompted... | website=UPI | date=1986-04-12 | url=https://www.upi.com/Archives/1986/04/12/David-Stockmans-famous-trip-to-the-woodshed-was-prompted/2637513666000/ | access-date=2024-01-02}}</ref>Political opponents of the [[Reagan administration]] soon seized on this language in an effort to brand the administration as caring only about the wealthy.<ref>{{Cite web |last=Thomas |first=Sowell |date=January 7, 2014 |title=The Trickle-Down Lie |url=https://www.nationalreview.com/2014/01/trickle-down-lie-thomas-sowell/ |website=National Review |access-date=May 24, 2022 |archive-date=May 24, 2022 |archive-url=https://web.archive.org/web/20220524023321/https://www.nationalreview.com/2014/01/trickle-down-lie-thomas-sowell/ |url-status=live }}</ref> In 1982, [[John Kenneth Galbraith]] wrote the "trickle-down economics" that Stockman was referring to was previously known under the name "horse-and-sparrow theory", the idea that feeding a horse a huge amount of oats results in some of the feed passing through for lucky sparrows to eat.<ref name=galbraith>Galbraith, John Kenneth (February 4, 1982) [http://www.nybooks.com/articles/archives/1982/feb/04/recession-economics/ "Recession Economics"]. {{Webarchive|url=https://web.archive.org/web/20201227204026/https://www.nybooks.com/articles/1982/02/04/recession-economics/ |date=December 27, 2020 }}. ''[[New York Review of Books]]'' Volume 29, Number 1.</ref>

In the [[1992 United States presidential election|1992 presidential election]], [[Independent politician|independent]] candidate [[Ross Perot]] also referred to trickle-down economics as "political voodoo".<ref>{{Cite web|url=http://www.livingroomcandidate.org/commercials/1992/trickle-down|website=The Living Room Candidate |title=Commercials – 1992 – Trickle Down|language=en|access-date=March 13, 2017|archive-date=December 27, 2020|archive-url=https://web.archive.org/web/20201227204017/http://www.livingroomcandidate.org/commercials/1992/trickle-down|url-status=live}}</ref> In the same election, during a presidential town hall debate, [[Bill Clinton]], referring to the previous presidencies of [[Ronald Reagan]] and [[George H.W. Bush]] stated "...we've had 12 years of trickle-down economics. We've gone from first to twelfth in the world in wages. We've had four years where we’ve produced no private-sector jobs. Most people are working harder for less money than they were making 10 years ago".<ref>{{Cite web |date=2012-10-16 |title=How Bill Clinton Engaged With One Voter To Win 1992 Town Hall Debate |url=https://www.huffpost.com/entry/bill-clinton-debate_n_1971685 |access-date=2024-07-30 |website=HuffPost |language=en}}</ref>

== Usage ==
Author and political commentator [[William Safire]], in his political dictionary published in 2008, defined "trickle-down theory" as "The idea that aid to corporations will seep through to employees and irrigate the economy."<ref name=Safire>{{cite book| last = Safire | first = William | author-link = William Safire | year = 2008 | title = Safire's Political Dictionary | edition = Revised | publisher = Oxford University Press | location = New York | isbn = 978-0-19-534334-2 | url = https://books.google.com/books?id=c4UoX6-Sv1AC&q=cross+of+gold | access-date = December 27, 2011|pages=752–753 | quote=...President Herbert Hoover argued that public relief measures proposed by some Demorats were "playing politics with human misery" and that his program was aimed at restoring prosperity to corporations and banks, which supposedly would in turn reinvograte the economy. The Democrats derided this as a "trickle-down theory" aimed at "feeding the sparrows by feeding the horses." }}</ref> 

=== Broader use ===
While the term "trickle-down" is commonly used to refer to income benefits, it is sometimes used to refer to the idea of [[externality|positive externalities]] arising from technological innovation or increased trade. [[Arthur Melvin Okun|Arthur Okun]],<ref>{{Cite book|url=https://archive.org/details/equalityefficien0000okun|url-access=registration|title=Equality and Efficiency, the Big Tradeoff|last=Okun|first=Arthur M.|date=1975|publisher=Brookings Institution|isbn=9780815764762|pages=[https://archive.org/details/equalityefficien0000okun/page/46 46]–47|language=en}}</ref> and separately [[William Baumol]],<ref>{{Cite book|url=https://books.google.com/books?id=REsy7T4EO8gC|title=The Microtheory of Innovative Entrepreneurship|last=Baumol|first=William J.|date=July 1, 2010|publisher=Princeton University Press|isbn=9781400835225|pages=80|language=en|access-date=September 17, 2020|archive-date=December 27, 2020|archive-url=https://web.archive.org/web/20201227204046/https://books.google.com/books?id=REsy7T4EO8gC|url-status=live}}</ref> for example, have used the term to refer to the flow of the benefits of innovation, which do not accrue entirely to the "great entrepreneurs and inventors", but trickle down to the masses.  And Nobel laureate economist [[Paul Romer]] used the term in reference to the impact on wealth from tariff changes.<ref>{{Cite journal|last=Romer|first=Paul|date=February 1, 1994|title=New goods, old theory, and the welfare costs of trade restrictions|journal=Journal of Development Economics|volume=43|issue=1|pages=5–38|doi=10.1016/0304-3878(94)90021-3|s2cid=28772407|issn=0304-3878|url=http://ageconsearch.umn.edu/record/294826/files/ipr064.pdf}}</ref> The [[Laffer curve]] is often cited by proponents of trickle-down policy.<ref>{{Cite news |title=Art Laffer still thinks he was right about tax cuts |language=en-US |newspaper=Washington Post |url=https://www.washingtonpost.com/lifestyle/2022/11/02/laffer-truss-trump-tax-cuts/ |access-date=2023-02-03 |issn=0190-8286 |archive-date=November 30, 2022 |archive-url=https://web.archive.org/web/20221130213718/https://www.washingtonpost.com/lifestyle/2022/11/02/laffer-truss-trump-tax-cuts/ |url-status=live }}</ref><ref name="lis truss favours">{{Cite news |last=Elliott |first=Larry |date=2022-09-20 |title=Liz Truss favours trickle down economics but results can be trickle up |language=en-GB |work=The Guardian |url=https://www.theguardian.com/business/2022/sep/20/liz-truss-favours-trickle-down-economics-but-results-can-be-trickle-up |access-date=2023-02-03 |issn=0261-3077 |archive-date=October 20, 2022 |archive-url=https://web.archive.org/web/20221020125826/https://www.theguardian.com/business/2022/sep/20/liz-truss-favours-trickle-down-economics-but-results-can-be-trickle-up |url-status=live }}</ref>

The political campaign group, [[Tax Justice Network]] has used the term referring broadly to wealth inequality in its criticisms of [[tax havens]].<ref>{{cite news|url=https://www.theguardian.com/business/2012/jul/21/offshore-wealth-global-economy-tax-havens|author=Heather Stewart|title=Wealth doesn't trickle down – it just floods offshore, research reveals|work=[[The Guardian]]|date=July 21, 2012|access-date=August 6, 2012|location=London|archive-date=November 2, 2013|archive-url=https://web.archive.org/web/20131102004811/http://www.theguardian.com/business/2012/jul/21/offshore-wealth-global-economy-tax-havens|url-status=live}}</ref> In 2013, [[Pope Francis]] used the term in his [[apostolic exhortation]] {{lang|la|[[Evangelii gaudium]]}}, saying that "Some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world."<ref>{{cite web|url=https://www.vatican.va/content/Francesco/en/apost_exhortations/documents/papa-francesco_esortazione-ap_20131124_evangelii-Gaudium.html#No_to_an_economy_of_exclusion|title=Evangelii Gaudium: Apostolic Exhortation on the Proclamation of the Gospel in Today's World|publisher=Holy See|access-date=December 9, 2019|archive-date=August 11, 2015|archive-url=https://web.archive.org/web/20150811092426/http://w2.vatican.va/content/francesco/en/apost_exhortations/documents/papa-francesco_esortazione-ap_20131124_evangelii-gaudium.html#No_to_an_economy_of_exclusion|url-status=live}}</ref>

In New Zealand, [[Damien O'Connor]], an [[Member of Parliament (New Zealand)|MP]] from the [[New Zealand Labour Party|Labour Party]], called trickle-down economics "the rich pissing on the poor" in the Labour Party campaign launch video for the [[2011 New Zealand general election|2011 general election]].<ref>{{Cite news|last=Chapman|first=Kate|date=October 28, 2011|title=Labour campaign video harks back to history|language=en|work=Stuff.co.nz|url=http://www.stuff.co.nz/national/politics/5870477/Labour-campaign-video-harks-back-to-history|access-date=October 5, 2016|archive-date=December 28, 2017|archive-url=https://web.archive.org/web/20171228055901/http://www.stuff.co.nz/national/politics/5870477/Labour-campaign-video-harks-back-to-history|url-status=live}}</ref> In a [[2016 US presidential election]] candidates debate, [[Hillary Clinton]] accused [[Donald Trump]] of supporting the "most extreme" version of trickle-down economics with his tax plan, calling it "trumped-up trickle-down" as a pun on his name.<ref>{{cite news|first=Jacob |last=Pramuk|date=September 26, 2016|title=Clinton: Trump would cut taxes for the rich in 'trumped up' trickle down economics|work=[[CNBC]]|url=https://www.cnbc.com/2016/09/26/clinton-trump-would-cut-taxes-for-the-rich-in-trump-dump-economics.html|access-date=September 17, 2017|archive-date=December 27, 2020|archive-url=https://web.archive.org/web/20201227204018/https://www.cnbc.com/2016/09/26/clinton-trump-would-cut-taxes-for-the-rich-in-trump-dump-economics.html|url-status=live}}</ref> In his [[2021 Joe Biden speech to a joint session of Congress|speech to a joint session of Congress]] on April 28, 2021, US President [[Joe Biden]] stated that "trickle-down economics has never worked".<ref>{{Cite web|url=https://thehill.com/policy/finance/550848-biden-trickle-down-economics-has-never-worked|title=Biden: 'Trickle-down economics has never worked'|work=The Hill |date=April 28, 2021|access-date=April 29, 2021|archive-date=April 29, 2021|archive-url=https://web.archive.org/web/20210429141703/https://thehill.com/policy/finance/550848-biden-trickle-down-economics-has-never-worked|url-status=live |last1=Jagoda |first1=Naomi }}</ref> Biden has continued to be critical of trickle-down.<ref>{{Cite web |title=Biden Criticizes 'Mega-MAGA Trickle-Down Economics' |url=https://www.wsj.com/livecoverage/midterms-elections-voting-2022-10-24/card/biden-democrats-are-beating-the-tide--c5RXlj5leVUu4n8rq5Y0 |access-date=2022-11-03 |website=WSJ |language=en |archive-date=November 3, 2022 |archive-url=https://web.archive.org/web/20221103032825/https://www.wsj.com/livecoverage/midterms-elections-voting-2022-10-24/card/biden-democrats-are-beating-the-tide--c5RXlj5leVUu4n8rq5Y0 |url-status=live }}</ref><ref>{{Cite web |title=Video 'I'm so sick and tired of trickle-down economics': Biden |url=https://abcnews.go.com/Politics/video/im-sick-tired-trickle-economics-biden-92558542 |access-date=2022-11-03 |website=ABC News |language=en |archive-date=November 3, 2022 |archive-url=https://web.archive.org/web/20221103032823/https://abcnews.go.com/Politics/video/im-sick-tired-trickle-economics-biden-92558542 |url-status=live }}</ref>

A Columbia journal article comparing a failed UK [[Enterprise Zone]] proposal to later US proposals references them as a form of trickle-down policy where lower regulatory and tax burdens were aimed at wealthier developers with the hope they would benefit residents.<ref>{{Cite journal |last=Jordan |first=Bre |date=2020-02-27 |title=DENOUNCING THE MYTH OF PLACE-BASED SUBSIDIES AS THE SOLUTION FOR ECONOMICALLY DISTRESSED COMMUNITIES: AN ANALYSIS OF OPPORTUNITY ZONES AS A SUBSIDY FOR LOW-INCOME DISPLACEMENT |url=https://journals.library.columbia.edu/index.php/cjrl/article/view/4840 |journal=Columbia Journal of Race and Law |language=en |volume=10 |issue=1 |doi=10.7916/cjrl.v10i1.4840 |issn=2155-2401 |access-date=February 1, 2023 |archive-date=February 1, 2023 |archive-url=https://web.archive.org/web/20230201182230/https://journals.library.columbia.edu/index.php/cjrl/article/view/4840 |url-status=live}}</ref> Nobel laureate [[Paul Krugman]] states that despite the narrative of trickle-down style tax cuts, the effective tax rate of the top 1% of earners has failed to change very much.<ref>{{Cite web |date=2017-08-20 |title=The Political Failure of Trickle-Down Economics |url=https://archive.nytimes.com/krugman.blogs.nytimes.com/2017/08/20/the-political-failure-of-trickle-down-economics/ |access-date=2023-02-01 |website=Paul Krugman Blog |language=en |archive-date=February 1, 2023 |archive-url=https://web.archive.org/web/20230201222323/https://archive.nytimes.com/krugman.blogs.nytimes.com/2017/08/20/the-political-failure-of-trickle-down-economics/ |url-status=live}}</ref> Political commentator [[Robert Reich]] has implicated institutions such as [[The Heritage Foundation]], [[Cato Institute]], and [[Club for Growth]] for promoting what he considers to be a discredited idea.<ref>{{Cite web |date=2022-10-09 |title=Why is trickle-down economics still with us? {{!}} Robert Reich |url=https://www.theguardian.com/commentisfree/2022/oct/09/why-is-trickle-down-economics-still-with-us |access-date=2023-02-01 |website=the Guardian |language=en |archive-date=January 20, 2023 |archive-url=https://web.archive.org/web/20230120031658/https://www.theguardian.com/commentisfree/2022/oct/09/why-is-trickle-down-economics-still-with-us |url-status=live }}</ref> Kansas governor and politician [[Sam Brownback]]'s 2018 tax cut package was widely labelled as an attempt at trickle-down economics.<ref>{{Cite web |date=2018-04-27 |title=After tax cuts many saw as a failure, Kansas may cut again |url=https://apnews.com/article/3d97692e048f4de9b9faef23c9146345 |access-date=2023-02-01 |website=AP NEWS |language=en |archive-date=February 1, 2023 |archive-url=https://web.archive.org/web/20230201221052/https://apnews.com/article/3d97692e048f4de9b9faef23c9146345 |url-status=live }}</ref> [[Friedrich Hayek]]'s economic theories have also been described as trickle-down by his opponents.<ref>{{Cite journal |last=Whyte |first=Jessica |date=2019 |title=The Invisible Hand of Friedrich Hayek: Submission and Spontaneous Order |url=https://www.jstor.org/stable/27126178 |journal=Political Theory |volume=47 |issue=2 |pages=156–184 |doi=10.1177/0090591717737064 |jstor=27126178 |issn=0090-5917 |access-date=February 2, 2023 |archive-date=February 2, 2023 |archive-url=https://web.archive.org/web/20230202032630/https://www.jstor.org/stable/27126178 |url-status=live |url-access=subscription }}</ref><ref name="griffiths">{{Cite web |date=2015-03-06 |title=Friedrich Hayek and the left: A response to Simon Griffiths |url=https://blogs.lse.ac.uk/politicsandpolicy/hayek-and-the-left-a-response/ |access-date=2023-02-02 |website=British Politics and Policy at LSE |archive-date=February 2, 2023 |archive-url=https://web.archive.org/web/20230202032632/https://blogs.lse.ac.uk/politicsandpolicy/hayek-and-the-left-a-response/ |url-status=live }}</ref>

=== Objections to the term ===
In 1983, [[H. W. Arndt]] described the term as a myth, saying that no major economists of the 1950s assumed that wealth would accumulate among the rich and then spread to the poor.<ref>{{Cite journal |last=Arndt |first=H. W. |date=1983 |title=The "Trickle-down" Myth |url=https://www.jstor.org/stable/1153421 |journal=[[Economic Development and Cultural Change]] |volume=32 |issue=1 |pages=1–10 |doi=10.1086/451369 |issn=0013-0079 |jstor=1153421 |s2cid=153842242|url-access=subscription }}</ref> 

Speaking on the [[US Senate]] floor in 1992, [[Hank Brown]] (Republican senator for Colorado) objected to the use of the term for the policies of Ronald Reagan and [[George H. W. Bush]], saying that they have never advocated for it.<ref>Hank Brown. ''[[Congressional Record]]'', March 24, 1992.</ref>{{primary source inline|date=September 2025}}

[[Thomas Sowell]], a proponent of [[supply-side economics]], says that trickle-down economics have never been advocated by any economist, writing in his 2012 essay ''"Trickle Down" Theory and "Tax Cuts for the Rich"'' that "[t]he 'trickle-down' theory cannot be found in even the most voluminous scholarly studies of economic theories."<ref>{{Cite book|url=https://www.hoover.org/sites/default/files/uploads/documents/Sowell_TrickleDown_FINAL.pdf|title="Trickle Down" Theory and "Tax Cuts for the Rich"|last=Sowell|first=Thomas|date=2012|publisher=Hoover Institution Press|isbn=9780817916152|pages=1–2|language=en|access-date=September 6, 2022|archive-date=October 6, 2022|archive-url=https://web.archive.org/web/20221006121923/https://www.hoover.org/sites/default/files/uploads/documents/Sowell_TrickleDown_FINAL.pdf|url-status=live}}</ref><ref name=CD_2014-01-08 > {{ cite news | url=https://www.dispatch.com/story/opinion/cartoons/2014/01/08/thomas-sowell-commentary-trickle-down/23503568007/ | title=Thomas Sowell commentary: Trickle-down economics is a figment of liberal imaginations | last=Sowell | first=Thomas | newspaper=[[Columbus Dispatch]] | date=2014-01-08 | quote=Years ago, this column challenged anybody to quote any economist outside of an insane asylum who had ever advocated this “trickle-down” theory. Some readers said that somebody said that somebody else had advocated a “trickle-down” policy. But they could never name that somebody else and quote them. ... One of the things that provoke the left into bringing out the “trickle-down” bogeyman is any suggestion that there are limits to how high they can push tax rates on people with high incomes, without causing repercussions that hurt the economy as a whole. }} </ref> Sowell disagrees with the characterization of supply-side economics as trickle-down, saying that the economic theory of reducing marginal tax rates works in precisely the opposite direction: "Workers are always paid first and then profits flow upward later – if at all."<ref>{{Cite web |url=https://www.creators.com/read/thomas-sowell/01/14/the-trickle-down-lie |title=The 'Trickle-Down' Lie |first=Thomas |last=Sowell |date=January 7, 2014 |access-date=December 1, 2020 |archive-date=December 27, 2020 |archive-url=https://web.archive.org/web/20201227204020/https://www.creators.com/read/thomas-sowell/01/14/the-trickle-down-lie |url-status=live }}</ref><ref>[http://www.tsowell.com/images/Hoover%20Proof.pdf {{"'}}Trickle Down' Theory and 'Tax Cuts for the Rich{{'"}}]. {{Webarchive|url=https://web.archive.org/web/20120924180805/http://tsowell.com/images/Hoover%20Proof.pdf |date=September 24, 2012 }}.</ref>{{better source needed|reason=This is published by a think-tank; we should find secondary sourcing for it.|date=September 2025}}  In 2014, Sowell called trickle-down economics the "biggest lie in politics," and said "The time is long overdue for people to ask themselves why it is necessary for those on the left to make up a lie if what they believe in is true."{{ r | CD_2014-01-08 }}

Benjamin Lockwood, professor of business economics and public policy at [[Wharton School|Wharton]], said "The term ‘trickle-down economics’ doesn’t really represent a cohesive economic theory,”  “It’s a term used, often negatively, to characterize the view that reducing taxes on the rich will benefit the non-rich.”{{ r | Lockwood }}

In 2022, the [[Liz Truss]] administration objected to characterizing its policies as "trickle-down economics".<ref>{{cite web | last=Mason | first=Rowena | title='No way' Truss's policies are trickle-down economics, says minister | website=the Guardian | date=2022-09-21 | url=https://www.theguardian.com/politics/2022/sep/21/no-way-trusss-policies-are-trickle-down-economics-says-minister | access-date=2024-01-02 | quote=Asked whether Truss is promoting the trickle-down theory, [Gillian Keegan, a Foreign Office minister], told BBC Breakfast: “That wasn’t actually a message, we don’t believe, which is based on our economy … You cannot say what we’ve done is trickle-down economics. ... She added: “There’s no way you could describe our approach as trickle-down.” }}</ref>

==Economic analyses of the effects of lowering taxes on the wealthy==
Nobel laureate [[Joseph Stiglitz]] wrote in 2015 that the post–World War II evidence does not support trickle-down economics, but rather "[[trickle-up economics]]" whereby more money in the pockets of the poor or the middle benefits everyone.<ref>{{Cite journal |last=Stiglitz |first=Joseph E. |date=December 2015 |title=8. Inequality and Economic Growth |url=https://onlinelibrary.wiley.com/doi/10.1111/1467-923X.12237 |journal=The Political Quarterly |language=en |volume=86 |pages=134–155 |doi=10.1111/1467-923X.12237 |access-date=February 1, 2023 |archive-date=February 1, 2023 |archive-url=https://web.archive.org/web/20230201170758/https://onlinelibrary.wiley.com/doi/10.1111/1467-923X.12237 |url-status=live }}</ref> In a 2020 research paper, economists David Hope and Julian Limberg analyzed data spanning 50 years from 18 countries, and found that tax cuts for the rich increased inequality in the short and medium term, and had no significant effect on real GDP per capita or employment in the short and medium term. According to the study, this shows that the tax cuts for the upper class did not trickle down to the broader economy. From 1980 to 2016, a [[Great Divergence (inequality)|divergence]] in the distribution of wealth was noted, with the top .01% of earners seeing a 600% change in real income, vs a 0% change in the bottom 99%, leading to the top 1% accruing 15% more of the total wealth pool, from a share of 15 to 30%.<ref name="Hope-2022">{{Cite journal |last1=Hope |first1=David |last2=Limberg |first2=Julian |date=2022-01-07 |title=The economic consequences of major tax cuts for the rich |journal=[[Socio-Economic Review]] |volume=20 |issue=2 |pages=539–559 |doi=10.1093/ser/mwab061 |issn=1475-1461 |doi-access=free | quote=We find that major tax cuts for the rich push up income inequality, as measured by the top 1% share of pre-tax national income. The size of the effect is substantial: on average, each major tax cut results in a rise of over 0.7 percentage points in top 1% share of pre-tax national income. The effect holds in both the short and medium term. Turning our attention to economic performance, we find no significant effects of major tax cuts for the rich. More specifically, the trajectories of real GDP per capita and the unemployment rate are unaffected by significant reductions in taxes on the rich in both the short- and medium-term. }}</ref><ref>{{Cite news |date=2020-12-21 |title=Trickle-Down Economics Fails a Sophisticated Statistical Test |language=en |work=Bloomberg.com |url=https://www.bloomberg.com/news/articles/2020-12-21/trickle-down-economics-fails-a-sophisticated-statistical-test |access-date=2023-02-01 |archive-date=February 24, 2023 |archive-url=https://web.archive.org/web/20230224165054/https://www.bloomberg.com/news/articles/2020-12-21/trickle-down-economics-fails-a-sophisticated-statistical-test |url-status=live }}</ref><ref>{{Cite web |last=Picchi |first=Aimee |date=December 17, 2020 |title=50 years of tax cuts for the rich failed to trickle down, economics study says |url=https://www.cbsnews.com/news/tax-cuts-rich-50-years-no-trickle-down/ |access-date=2023-02-01 |website=CBS News |language=en-US |archive-date=February 1, 2023 |archive-url=https://web.archive.org/web/20230201220351/https://www.cbsnews.com/news/tax-cuts-rich-50-years-no-trickle-down/ |url-status=live }}</ref><ref>{{cite news |author1=Christopher Ingraham |date=December 23, 2020 |orig-date= |title='Trickle-down' tax cuts make the rich richer but are of no value to overall economy, study finds |newspaper=[[The Washington Post]] |place=Washington, D.C. |url=https://www.washingtonpost.com/business/2020/12/23/tax-cuts-rich-trickle-down/ |issn=0190-8286 |oclc=1330888409 |access-date=October 3, 2022 |archive-date=August 19, 2022 |archive-url=https://web.archive.org/web/20220819175439/https://www.washingtonpost.com/business/2020/12/23/tax-cuts-rich-trickle-down/ |url-status=live }}</ref>

A 2015 IMF staff discussion note by Era Dabla-Norris, Kalpana Kochhar, Nujin Suphaphiphat, Frantisek Ricka and Evridiki Tsounta suggests that lowering taxes on the top 20% could actually reduce growth.<ref>{{Cite journal |title=Staff Discussion Notes Volume 2015 Issue 013: Causes and Consequences of Income Inequality: A Global Perspective (2015) |url=https://www.elibrary.imf.org/view/journals/006/2015/013/006.2015.issue-013-en.xml |access-date=2023-02-03 |website=imfsg |language=en |doi=10.5089/9781513555188.006 |archive-date=February 3, 2023 |archive-url=https://web.archive.org/web/20230203050712/https://www.elibrary.imf.org/view/journals/006/2015/013/006.2015.issue-013-en.xml |url-status=live |doi-access=free}}</ref><ref>{{Cite book |last=Goodwin |first=Neva R. |title=Principles of economics in context |date=2020 |isbn=978-0-429-43875-2 |edition=Second |publisher=Routledge|location=New York, NY |oclc=1111577770}}</ref> Political scientists Brainard Guy Peters and Maximilian Lennart Nagel in 2020 described the 'trickle down' description of tax cuts for the wealthy and corporations stimulating economic growth that helps the less affluent as a "zombie idea" and stated that it has been the most enduring failed policy idea in American politics.<ref>{{Cite book |last1=Peters |first1=Brainard Guy |last2=Nagel |first2=Maximilian Lennart |date=2020 |title=Zombie Ideas: Why Failed Policy Ideas Persist |url=https://www.cambridge.org/core/elements/zombie-ideas/77F6FA03E416DB0E578213464BA1E860 |access-date=November 28, 2020 |series=Elements in Public Policy |publisher=Cambridge University Press |page=8 |language=en |doi=10.1017/9781108921312 |isbn=9781108921312 |s2cid=229422499 |archive-date=December 27, 2020 |archive-url=https://web.archive.org/web/20201227204017/https://www.cambridge.org/core/elements/zombie-ideas/77F6FA03E416DB0E578213464BA1E860 |url-status=live}}</ref>

==Effects of very high marginal tax rates==
Sowell noted that [[John Maynard Keynes]] in 1933 said, that “taxation may be so high as to defeat its object,”.{{ r | CD_2014-01-08 }}

He also noted that even left-wing politicians like [[Woodrow Wilson]] in 1919 stated that very high tax rates are detrimental to the economy at large and [[John F. Kennedy]] in 1962 stated "it is a paradoxical truth that tax rates are too high today and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now."{{ r | CD_2014-01-08 }}

== See also ==
{{div col|colwidth=30em}}
* {{Annotated link|A rising tide lifts all boats}}
* {{Annotated link|Austerity}}
* {{Annotated link|Classical economics}}
* {{Annotated link|Economic inequality}}
* {{Annotated link|Keynesian economics}}
* {{Annotated link|Matthew effect}}
* {{Annotated link|Neoclassical economics}}
* {{Annotated link|Palace economy}}
{{div col end}}

== References ==
{{reflist|30em|refs=}}

== Further reading ==
* {{cite journal|last=Aghion|first=Philippe|author2=Bolton, Patrick|year=1997|title=A Theory of Trickle-Down Growth and Development|journal=[[The Review of Economic Studies]]|volume=64|issue=2|pages=151–72|doi=10.2307/2971707|publisher=The Review of Economic Studies Ltd.|jstor=2971707}}
* Gerald Marvin Meier, Joseph E. Stiglitz (2001) ''[https://books.google.com/books?id=MT1Ev72eZLoC Frontiers of Development Economics: The Future in Perspective]'' p.&nbsp;422.
* [[Karla Hoff]] and [[Joseph E. Stiglitz]] (1998) ''Adverse Selection and Institutional Adaptation'' – Department of Economics Working Paper Series/University of Maryland, College Park, Dept. of Economics; no. 98–102.
* {{cite journal |journal= Socio-Economic Review |volume=20 |issue=2 |date=April 2022 |pages =539–559 |title= The economic consequences of major tax cuts for the rich |doi=10.1093/ser/mwab061 |url=https://academic.oup.com/ser/article/20/2/539/6500315 |first1=David |last1=Hope |first2=Julian |last2=Limberg |doi-access=free }}
* [[Randy Albelda|Randy P. Albelda]], June Lapidus, Elaine McCrate and Edwin Melendez (1988). [https://books.google.com/books?id=dm0NOYSwh6kC ''Mink Coats Don't Trickle Down: The Economic Attack on Women and People of Color'']. {{ISBN|0-89608-328-4}}.
* “Reaganomics: A Watershed Moment,[https://www.researchgate.net/publication/330443901_Reaganomics_A_Watershed_Moment_on_the_Road_to_Trumpism Reaganomics A Watershed Moment on the Road to Trumpism.pdf]," The Economists’ Voice, 2019, 16: 1.
* {{Cite book |last=[[Kim Phillips-Fein]] |url=https://archive.org/details/invisiblehandsma00phil |title=Invisible Hands: The making of the conservative movement from the new deal to Reagan |date=2009 |publisher=W. W. Norton & Company |others=Internet Archive |isbn=978-0-393-05930-4}}

== External links ==
{{wikiquote}}
* John Miller. [http://www.dollarsandsense.org/archives/2004/0704miller.html "Ronald Reagan's Legacy"].
* {{cite news |url=https://www.nytimes.com/2007/04/12/business/12scene.html|work=[[The New York Times]] |title=In the Real World of Work and Wages, Trickle-Down Theories Don't Hold Up |first=Robert |last=Frank|date=April 12, 2007|access-date=March 5, 2008}}
* [https://www.theguardian.com/commentisfree/2014/jan/20/trickle-down-economics-broken-promise-richest-85 "Trickle-down economics is the greatest broken promise of our lifetime"] (January 20, 2014). ''[[The Guardian]]''.
* [https://money.cnn.com/2015/06/15/news/economy/trickle-down-theory-wrong-imf/index.html "The 'trickle down theory' is dead wrong"] (June 15, 2015). [[CNNMoney]].

[[Category:1930s neologisms]]
[[Category:Economic ideologies]]
[[Category:Neoliberalism]]
[[Category:Political terminology of the United States]]
[[Category:Satire]]
[[Category:Reagan Era]]
[[Category:Pejorative terms]]