Every time I hear the words Trickle Down Economics I wonder who the economist was that proposed this grand theory.

Well I've never been successful in finding out who advanced this Trickle Down economic theory and those that talk about how bad it is don't seem to know the name of the economist(s) that did so.

I have always surmised it's a caricature advanced by leftist politicians.

Any way Dr. Thomas Sowell sorts it all out in the pamphlet below.

Here's the first two paragraphs:

"At various times and places, particular individuals have argued that existing tax rates are so high that the government could collect more tax revenues if it lowered those tax rates, because the changed incentives would lead to more economic activity, resulting in more tax revenues out of rising incomes, even though the tax rate was lowered. This is clearly a testable hypothesis that people might argue for or against, on either empirical or analytical grounds. But that is seldom what happens.

"Even when the particular tax cut proposal is to cut tax rates in all income brackets, including reducing tax rates by a higher percentage in the lower income brackets than in the upper income brackets, such proposals have nevertheless often been characterized by their opponents as “tax cuts for the rich” because the total amount of money saved by someone in the upper income brackets is often larger than the total amount of money saved by someone in the lower brackets. Moreover, the reasons for proposing such tax cuts are often verbally transformed from those of the advocates — namely, changing economic behavior in ways that generate more output, income and resulting higher tax revenues — to a very different theory attributed to the advocates by the opponents, namely “the trickle-down theory.”

Enjoy.

Download "Trickle Down" Theory and "Tax Cuts for the Rich" (PDF) here…

Read it below: