trickledown

Trickledown, or trickle-down economics, is a term used to describe the claim that benefits awarded to the wealthy or to businesses—such as tax cuts, deregulation, or subsidies—will eventually spill over to broader society through higher investment, job creation, and wage growth.

The concept is associated with supply-side economics and policy reforms promoted in many Western economies since the late 20th century, notably in the United States under the Reagan administration and in parts of the United Kingdom under Thatcher. Proponents argue that reducing barriers to capital formation expands growth and that a stronger economy will lift all income groups.

Proponents contend that lower taxes on capital and income stimulate investment, productivity, and employment, and that increased profits at the top will raise overall demand via higher wages and consumer spending.

Critics argue that benefits tend to accrue to higher-income groups rather than to the broader population, with limited or uneven spillovers. They cite rising income inequality in some periods and studies showing modest or conditional effects that depend on broader policy context and macroeconomic conditions.

Today, the term remains a focal point in fiscal policy debates, often invoked to frame tax cuts and deregulation as growth strategies, while supporters view it as a mischaracterization when growth fails to become broadly shared.