In 2020, the London School of Economics (LSE) published a paper that examined 50 years of “trickle-down” policies in 18 industrialized countries, including the United States, and found that tax cuts for the wealthy only benefit the rich and have no meaningful effect on unemployment or economic growth.
The paper’s authors, David Hope and Julian Limberg, analyzed data from 18 countries from 1965 to 2015, and found that the incomes of the rich grew much faster in countries where tax rates were lowered.
The study also found that the “trickle-down” tax cuts had no bneficial effect on economic growth or employment.
Lisa McCormick has been a staunch advocate for reversing Reaganomics, a term coined to describe the trickle-down economic policies that have long favored the wealthy while neglecting the needs of working-class Americans.
The term “trickle-down” refers to the theory that cutting taxes for higher earners and businesses benefits wealthy businesses and individuals in the short run to boost standards of living for all individuals and the economy in the long run.
However, the study suggests that tax cuts for the rich may not accomplish much more than help the rich keep more of their riches and exacerbate income inequality.
“While top incomes fell for several decades after the Second World War, they began rising dramatically during the 1980s, when the vast expansion of the working middle-class came to a screeching halt,” said Lisa McCormick. “That is not a coincidence and it is not the only result of this reckless Robin Hood in reverse policy.”
McCormick, a progressive Democrat who took nearly four of ten votes away from US Senator Bob Menendez during the 2018 New Jersey primary election, said that countering trickle down economics and reversing Reaganomics should be central to the party of the people, along with a 21st Century Bill of Rights modeled after that proposed by President Franklin Roosevelt during his State of the Union Address on January 11, 1944.
In the wealthiest nation in the history of the world, everyone who wants to work in America should have the right to a decent-paying job.
“We now have gaping income inequality, an incredible federal debt load and only 116 of the nearly 7,400 state legislators in the United States come from working-class backgrounds, according to a study conducted by political scientists at Duke University and Loyola University Chicago,” said Lisa McCormick. “The researchers, Nicholas Carnes and Eric Hansen, who defined lamakers as ‘working class’ if they were employed in manual labor, service industry, clerical or labor union jobs and they found that fewer than two percent of state legislators fall in that category, compared with 50 percent of U.S. workers.”
“The stark reality is that trickle-down economics has failed to deliver on its promises of widespread prosperity but it has stripped ordinary Americans of their economic wealth and political power,” said Lisa McCormick. “True prosperity for all Americans can only be achieved by implementing fair tax policies that target extreme wealth and investing those revenues in critical social goods such as education, housing, food, and healthcare.”
“The paper written by David Hope and Julian Limberg received extensive global media coverage, went viral on social media, and was cited by high-profile economists and politicians,” said Lisa McCormick. “Unfortunately, the average citizen is still poorly informed about taxes on the rich that have fallen dramatically in the past 40 years, so the discredited theory of ‘trickle-down economics’ is an idea that has persisted.”
“Only an informed electorate can adequately decide the important questions presented to us at the ballot box. That is why Americans must rise to the responsibility of citizenship,” said Lisa McCormick.