Is “trickle-down” economics a superior tax policy?
“Trickle-down” economics, also know as supply-side economics, was made widely known by Ronald Reagan. The theory state that the best use of tax policy to benefit the country as a whole is to lower tax rates for the very rich and to remove tax “burdens” from businesses. The wealthy individuals who now have lower taxes will then use their new funds to start new businesses and expand existing ones, thus creating more jobs. The people who get those jobs will then pay taxes on their income and the decrease in tax rates will thus result in an increase in the total amount of taxes collected. The same argument is made for tax reductions and tax credits for existing companies and corporations.
