Hope & Limberg: evidence against "trickle-down" economics

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Tax cuts for the wealthy have long drawn support from conservative lawmakers and economists who argue that such measures will "trickle down" and eventually boost jobs and incomes for everyone else. But a new study from the London School of Economics says 50 years of such tax cuts have only helped one group — the rich.

The new paper, by David Hope of the London School of Economics and Julian Limberg of King's College London, examines 18 developed countries — from Australia to the United States — over a 50-year period from 1965 to 2015. The study compared countries that passed tax cuts in a specific year, such as the U.S. in 1982 when President Ronald Reagan slashed taxes on the wealthy, with those that didn't, and then examined their economic outcomes.

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"Based on our research, we would argue that the economic rationale for keeping taxes on the rich low is weak," Julian Limberg, a co-author of the study and a lecturer in public policy at King's College London, said in an email to CBS MoneyWatch. "In fact, if we look back into history, the period with the highest taxes on the rich — the postwar period — was also a period with high economic growth and low unemployment."

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The rich have always had a lot of incentive to keep that money from trickling down. Why would they want that? Why wouldn't they fight tooth and nail to keep that from happening? If money is trickling down then that's money they don't have. I imagine they see it like a leak in a boat that needs to be plugged up.
If they were reasonable they might realize that the rabble won't be able to keep giving them money if they don't have money to spend on the goods and services the wealthy control. But the wealthy are blinded by their stubborn belief in their own rationality and merit.

Does anyone still seriously believe in voodoo economics?

The point of "trickle down economics" is a belief that low taxes supposedly make rich people more comfortable investing their money in businesses, thereby creating more jobs, hence more money for everyone.