What is Trickle Down Economics?

Category: Economics

1Definition

The theory that tax cuts and benefits for corporations and wealthy individuals will 'trickle down' to benefit everyone.

2Context

Politically controversial. Proponents say it spurs investment; critics argue benefits concentrate at the top.

3Example

Reagan's 1980s tax cuts were based on trickle-down theory—lower top rates were expected to boost growth for all.

⚠Common Trap

Economists rarely use this term—they say 'supply-side economics.' 'Trickle down' is mainly a political label.

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