Trickle-down economics, first popularized by the Reagan Administration but around for decades before then, seems to be making a comeback with the Trump Administration’s new tax plan. The logic behind the plan is simple- tax less, but deliver the majority of the benefits to the members of the upper tax brackets. The nonpartisan Tax Policy Center predicts that with the new tax plan, the average member of the middle class will save merely $360 while the top 1% of earners will save over sixty thousand dollars. Despite this, however, proponents of the new system believe that even though those earning lower incomes won’t get as much of a flat-out tax break, the benefits will “trickle down” from the top levels of the economy. Thus, by cutting the taxes at the top, everyone will benefit. Some of the main provisions seem like they benefit the ultra-rich and no one else. The bill calls to end the inheritance tax for the wealthiest people, to cut the corporate tax rate from 35% to 20%, and to cut business partnership taxes.
In the same vein as Reagan’s economic philosophy, Trump’s tax plan system directs the tax deductions towards higher income brackets, and assumes the benefits of said tax cuts will trickle down to the rest of society. If people and businesses pay less in taxes, they will invest more, consume more, and hire more as well. As such, this process will lead to benefits for all economic classes. Detractors of the policy say that the plan will only make the rich richer and add to the government deficit. Arguments both for and against are grounded in sound economic logic. Therefore, only time will tell if the Trump Administration will be successful in employing this controversial policy.