Study: Fifty Years of GOP Trickle Down Economics Has Only Benefitted the Rich

Thinking people - a category that increasingly excludes most Republicans - long ago figured out the past fifty years of Republican tax cuts for the rich labeled as trickle down economics would do little or nothing for anyone but the rich receiving the tax cuts. Now a new study by David Hope of the London School of Economics and Julian Limberg of King's College London, that examined 18 developed countries and their tax policies confirms this reality.  All that has happened is that the rich are richer and wealthy disparities have increased in nations that have followed the Republican formula proving once and for all that voodoo economics is too kind of a label for this failed approach and that it has constituted nothing more than taking from the poor to give to the rich. Stated another way, it's clear that the only justification for the failed agenda is greed among the wealthy and a disregard for the majority of Americans.  Sadly, many working and middle class voters continue to either fall for the lie or allow themselves  to be coopted by the GOP's calls to racism, right wing religious extremism or simple animus for others.  CBS News looks at the study findings.  Here are highlights:

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. 

[T]he 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."

[T]he 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.

To be sure, the economy was humming along before the pandemic struck the nation in March . . . 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.

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.