Despite what many Republicans, politicians, Trump and the ever glorified Reagan would have you believe, trickle down economics does not work. It is a policy that has been shoved down the throats of the unsuspecting working class, disguised as a strategy that will help them, but in reality, it only leads to their detriment.
The theory of trickle down economics is that when you cut taxes and strip away regulations on the wealthy and big businesses, they will then prosper economically. This growth will supposedly lead to them creating more jobs and stimulating the economy so that the wealth “trickles down” through the middle class and to the poor.
But it’s all a lie, in this situation the wealthy do not pay their fair share of taxes and businesses function unregulated, scourging for more ways to make more money and hold on to their wealth.
The only things being trickled down in this system are financial insecurity and economic inequality of the likes we haven’t seen since the Great Depression. At this moment the top 1 percent of the country has more wealth than the entire bottom 90%, those at the top make more money than every single working class teacher, engineer, lawyer, construction worker and firefighter combined and even more than the lucky ones in the top 10 percent.
One of the main problems with trickle-down economics is that it does not complete its purpose of job creation. We have seen that as the tax rate for those at the top goes down, unemployment has not decreased, in some years it even went up. Especially during Reagan’s first presidential term, as he was the most famous advocate for trickle down economics and big businesses. He lowered the tax rate on the wealthy from 70% during Jimmy Carter’s presidency to as low as 28%, with the unemployment rate increasing more than 5 percentage points. The top 1% today pays 24.7% in income tax, only 5 percent more than an American who makes an average of 75,000. And our new president plans to lower the taxes even more on the wealthy and businesses.
How long can we accept this unfair inequality? How long can we allow politicians to further the agenda of the wealthy and disguise it as a way to help the poor? How long must we stand idle as our government allows the gap between the middle class and the rich to become wider than ever before?
We didn’t used to have such economic inequality, in fact, after World War 2 our economy was booming and not only was the upper class prospering but so was the middle and lower class. And this time of economic growth was not when we cut taxes on the rich or deregulated businesses, quite the opposite the wealthiest (those in the top tax bracket) were taxed at a rate of 91% in the 1950s and 1960s. This higher tax rate made sure that the pay inequality was more balanced and that more money was added to the federal budget to fund vital social services such as welfare and Medicaid. Before trickle down economic policies, the top 1% brought home 9% of the country’s entire income in the 1970s. Today, the top 1% brings home 24% of the United States’ income.
However, the biggest lie in trickle down economics is that it’s the wealthy that stimulate the economy the most when in reality it’s the working class.
Studies found that when the top earners in society make more money, it actually slows down economic growth. On the other hand, when the lower class earns more, there is more economic growth and benefits to society. Just a one percent increase in the wages of the lower class increases the rate of growth by 4 percent. The researchers also found that “benefits do not trickle down” based on an analysis in over 150 countries.
Trickle-down economics is a practice that doesn’t work and is only pushed by politicians and big businesses for their own personal gain. A practice used by a government that works for Wall Street and helps them thrive rather than focusing on our struggling working class. And our latest administration seems to have no qualms over continuing this unfair practice, as the rich get richer and the lower class continues to suffer.