https://www.cbsnews.com/news/tax-cuts-rich-50-years-no-trickle-down/ * Latest + U.S. + World + Politics + Entertainment + HealthWatch + MoneyWatch + Crime + Space + Sports + Brand Studio * Local News + Baltimore + Bay Area + Boston + Chicago + Colorado + Detroit + Los Angeles + Miami + Minnesota + New York + Philadelphia + Pittsburgh + Sacramento + Texas * Live + CBS News 24/7 + Baltimore + Bay Area + Boston + Chicago + Colorado + Detroit + Los Angeles + Miami + Minnesota + New York + Philadelphia + Pittsburgh + Sacramento + Texas + 48 Hours + 60 Minutes * Shows + 48 Hours + 60 Minutes + America Decides + CBS Evening News + CBS Mornings + CBS Morning News + CBS Reports + CBS Saturday Morning + The Daily Report + The Dish + Eye on America + Face the Nation + Here Comes the Sun + Person to Person + Sunday Morning + The Takeout + The Uplift + Weekender * + CBS News Investigates + CBS News Confirmed + CBS Village + Podcasts + In Depth + Newsletters + Download Our App + CBS News Team + Executive Team + Brand Studio + Paramount+ + Join Our Talent Community + RSS Feeds + Davos Interviews + A Moment With... + Innovators & Disruptors + Economy 4.0 * * MoneyWatch * Managing Your Money * Your Taxes * Retirement Watch CBS News MoneyWatch 50 years of tax cuts for the rich failed to trickle down, economics study says moneywatch By Aimee Picchi December 17, 2020 / 12:43 PM EST / MoneyWatch * * * Bipartisan senators unveil COVID relief bills Bipartisan group of senators unveil COVID-19 relief bills 49:53 Tax cuts for the wealthy have long drawn support from conservative lawmakers and economists who argue that such measures will "trickle down" and eventually boost jobs and incomes for everyone else. But a new study from the London School of Economics says 50 years of such tax cuts have only helped one group -- the rich. The new paper, by David Hope of the London School of Economics and Julian Limberg of King's College London, examines 18 developed countries -- from Australia to the United States -- over a 50-year period from 1965 to 2015. The study compared countries that passed tax cuts in a specific year, such as the U.S. in 1982 when President Ronald Reagan slashed taxes on the wealthy, with those that didn't, and then examined their economic outcomes. Per capita gross domestic product and unemployment rates were nearly identical after five years in countries that slashed taxes on the rich and in those that didn't, the study found. But the analysis discovered one major change: The incomes of the rich grew much faster in countries where tax rates were lowered. Instead of trickling down to the middle class, tax cuts for the rich may not accomplish much more than help the rich keep more of their riches and exacerbate income inequality, the research indicates. "Based on our research, we would argue that the economic rationale for keeping taxes on the rich low is weak," Julian Limberg, a co-author of the study and a lecturer in public policy at King's College London, said in an email to CBS MoneyWatch. "In fact, if we look back into history, the period with the highest taxes on the rich -- the postwar period -- was also a period with high economic growth and low unemployment." In our piece for @ConversationUK, David Hope and I argue that governments should not give undue concern to the economic consequences of taxing the rich when deciding how to pay for COVID-19. https://t.co/MRgnX8JfmH -- Julian Limberg (@JulianLimberg) December 16, 2020 Because the analysis ends in 2015, the research doesn't include President Donald Trump's massive tax overhaul, which he signed into law in late 2017 and which slashed taxes for the rich and corporations while providing a moderate cut for the middle class. But Limberg, who co-authored the study with David Hope, a visiting fellow at the London School of Economics' International Inequalities Institute, said that he wouldn't expect the results of that tax cut to be much different. Already, Mr. Trump's tax cuts have lifted the fortunes of the ultra-rich, according to 2019 research from two prominent economists, Emmanuel Saez and Gabriel Zucman of the University of California at Berkeley. For the first time in a century, the 400 richest American families paid lower taxes in 2018 than people in the middle class, the economists found. The "careful" new research from the London School Economics "suggests indeed that tax increases on the wealthy should be considered post-COVID," Berkeley's Zucman said in an email to CBS MoneyWatch. Engine for stronger economic growth? To be sure, the economy was humming along before the pandemic struck the nation in March, with an unemployment rate that was at its lowest in about half a century. Conservative think tanks such as the American Enterprise Institute pointed to Mr. Trump's tax cuts as an engine for stronger economic growth. Yet even so, millions of American families struggled to find jobs that paid living wages, while the cost of essentials such as health care, housing and education increased at far faster rates than the typical income. Even before the pandemic, income inequality had reached its highest point in 50 years, according to Census data. In 2020, the pandemic has worsened inequities across all spectrums, touching racial, gender and educational divides. When the economy shut down in March, workers who couldn't transition to remote work -- typically lower-paid employees involved in retail, service and hospitality jobs -- were hit the hardest. At the same time, white-collar workers generally fared better as they were more likely to maintain their jobs as they shifted to remote work. Investors also benefited as the stock market rallied on hopes for an economic recovery -- a development that doesn't help most low- and middle-class workers. Only about half the U.S. population is invested in the stock market through their retirement and savings accounts, and even then more than 80% of all stocks are owned by the richest 10%. BREAKING: U.S. billionaires have grown their collective wealth by $1 trillion since mid-March. That's more than it would cost to send a $3,000 stimulus check to every person in America. More of our latest research here: https://t.co/wvfXxl92yK pic.twitter.com/sYgDKiuW70 -- Americans For Tax Fairness (@4TaxFairness) December 9, 2020 Since the pandemic began, the combined wealth of America's 651 billionaires has jumped by more than $1 trillion, reaching $4 trillion in early December, Americans for Tax Fairness said earlier this month. Meanwhile, almost 8 million Americans have fallen into poverty since the start of the pandemic through November, according to new data released by the University of Chicago and the University of Notre Dame. Rebuilding the economy and household wealth for low- and middle-class families are among the issues facing President-elect Joe Biden after he's inaugurated next month. Raising taxes on the rich and corporations could provide trillions of dollars in resources for helping the economic recovery, Zucman told CBS MoneyWatch. "This is not only a viable option, but also a fair option, because some of the wealthiest taxpayers have benefited from the pandemic -- for instance large corporations such as Amazon and their shareholders," he noted. "These taxpayers could reasonably be asked to pay more to make up for pandemic losses." Coronavirus Pandemic More Sign at entrance of Publix grocery store advertising Flu Shot services, Palm Beach, Florida Flu deaths may have surpassed COVID deaths nationwide, early data suggests cbsn-fusion-us-math-and-reading-test-scores-fall-amid-pandemic-thumbnail-1405314-640x360.jpg U.S. kids' reading, math skills still buffeted by COVID-era losses, test shows Intelligence COVID Origins China says it's "extremely unlikely" COVID pandemic came from lab leak Intelligence COVID Origins CIA now says COVID most likely originated from a lab leak A young woman fell ill during the Christmas and New Year holidays. She sits at home on the sofa covered with a blanket, wipes her nose from a runny nose with a napkin, holds a cup of drink, medicine Are you contagious? Here's when you're most likely to spread COVID, flu, RSV More Aimee Picchi Aimee Picchi is the associate managing editor for CBS MoneyWatch, where she covers business and personal finance. She previously worked at Bloomberg News and has written for national news outlets including USA Today and Consumer Reports. Twitter (c) 2020 CBS Interactive Inc. All Rights Reserved. More from CBS News Airlines look to cut consumer protections for wheelchair-using travelers Elon Musk to be let inside Fort Knox to inspect gold reserves What is the IRS 90-day tax rule and how does it work? Judge frees New York man after sentencing him to 5 life terms 27 years ago Copyright (c)2025 CBS Interactive Inc. All rights reserved. * Privacy Policy * California Notice * Do Not Sell My Personal Information * Terms of Use * About * Advertise * Closed Captioning * CBS News Store * Site Map * Contact Us * Help * facebook * twitter * instagram * youtube View CBS News In CBS News App Open Chrome Safari Continue Be the first to know Get browser notifications for breaking news, live events, and exclusive reporting. Not Now Turn On