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Trickle-down economics

Economic and political term / From Wikipedia, the free encyclopedia

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Trickle-down economics is a term used in critical references to economic policies to say they disproportionately favor the upper end of the economic spectrum, i.e., wealthy investors and large corporations. In recent history, the term has been used broadly by critics of supply-side economics.[1] Major US examples of what critics have called "trickle-down economics" include the Reagan tax cuts,[2] the Bush tax cuts,[3] and the Tax Cuts and Jobs Act of 2017.[4] Major UK examples include Liz Truss's mini-budget tax cuts of 2022.[5] As of 2023, a number of studies have failed to demonstrate a link between reducing tax burdens on the upper end and economic growth.

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.

Trickle-down economics contrasts with trickle-up economics (also known as bubble-up economics) which is more associated with demand-side economics.