Adding another nail to the coffin of Reaganomics, a recent study published by the International Monetary Fund (IMF) has concluded that, contrary to the principles of “trickle-down” economics, an increase in the income share of the wealthiest people actually leads to a decrease in GDP growth.
“The benefits do not trickle down,” the authors of the study write, directly contradicting the theory that US president Ronald Reagan popularized in the 1980s. Reagan argued that decreasing the tax burden for the rich–investors, executives, corporations and the like–would not only increase their own income but stimulate broad economic growth as they create opportunities for others’ increased prosperity. This belief has been at the center of conservative economic thought in the United States and abroad since Reagan’s presidency, during which he cut tax rates for the rich.
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