A New Year's Wish for 2026: An End to Trickle-Down

May 2025 be the last year for quite awhile featuring tax cuts for the rich & corporations

By William Rice

The year rapidly coming to a close should by all rights be the last one for a long time featuring U.S. tax cuts for rich households and big corporations. Let’s hope future generations will be able to cite 2025 as the end of the trickle-down tax-cut era that began over 40 years ago. Given the powerful forces wishing the opposite, we will have to fight to make it  come true––but it’s a  reasonable wish all the same. 

The theory that cutting taxes on the wealthiest people and most profitable companies somehow benefits all the rest of us–a theory first pursued in the 1980s during the presidency of Republican Ronald Reagan–has been proven conclusively wrong. The multi-decade ascendancy of supply-side, trickle-down economics (broken only occasionally by tentative attempts to better tax the rich) has coincided with a dramatic widening of economic inequality. Turns out the main thing that happens when you give more money to the wealthy is that–little surprise–they get wealthier while everyone else falls further behind. 

Another predictable result of cutting taxes on the wealthy is that the government will collect less revenue than if the taxes had not been cut. That might seem obvious, but supply-side apologists have argued that cutting taxes will stimulate so much economic growth that the Treasury will wind up a net winner. But that doesn’t happen either. Instead, deficits increase. The national debt as a share of the economy is close to the record set during World War II. A study from a few years ago found that the tax cuts enacted during the presidencies of George W. Bush and Donald Trump, both Republicans, were responsible for over half the increase in public debt this century. 

To be clear, rising public debt is not always a bad thing. During times of national crisis–such as a war or an economic slump–federal deficits are necessary to meet the demands of the moment. They also stimulate demand that counteracts recessions. But running big deficits just in order to give tax cuts to the rich and corporations they own is wasteful and dangerous.

Another thing that happens when you give away a lot of potential revenue to the wealthy is that there is less to invest in the American people through public services. Healthcare, education, housing and other pillars of a decent society rely on federal funding. When less money is raised from the rich and corporations, there is less to spend on services that help workers get by and get ahead, that allow families to survive and thrive. 

A third drawback to showering tax cuts on the rich is that by making them even richer, it unbalances society. The rise of the billionaire is the ultimate expression of this phenomenon. 

The collective wealth of America’s 900 or so billionaires topped $8 trillion for the first time this fall. Elon Musk was recently worth $600 billion, more than the economic output of entire nations including Austria and Thailand.  Bill Gates is the nation’s largest owner of farm land, pushing out real farmers in the process. Billionaires are big players in private equity, pools of unregulated capital that often ruin the industries they enter, including healthcare and housing. 

Perhaps the most serious impact of the rise of the billionaire class is on democracy. Billionaires increasingly are translating their almost unlimited resources into political power. Last year, just 100 billionaire families spent a record-breaking $2.6 billion on federal elections. That’s one of every six dollars spent by all candidates, parties and committees combined. 

For all these reasons and more, a big majority of Americans are fed up with tax cuts for the rich. A recent survey found that almost two-thirds (63%) of respondents favored raising taxes on big businesses; almost six in ten (58%) wanted higher taxes on the wealthy–which in this poll were defined as households with incomes over $400,000. Even pluralities of Republicans backed raising taxes on these two groups–and solid majorities of Republicans opposed cutting taxes on them. Even with all the money pouring in from rich donors seeking ever lower taxes, politicians can’t ignore this kind of overwhelming public opinion forever. 

So that’s why last summer’s Trump-GOP tax-and-spending law should be the last hurrah for cutting taxes on the rich, at least for a long while. We need to conquer that bad habit so we can at last turn our attention to reforming the tax code to ensure the wealthy and big corporations finally pay their fair share.