Trickle-down economics

Trickle-down economics, also known as trickle-down theory and the horse-and-sparrow theory, is a term, most-often used pejoratively, to describe government economic policies that disproportionately favor the upper tier of the economic spectrum (wealthy individuals and large corporations). The term has been used broadly by critics of supply-side economics to refer to taxing and spending policies by governments that, intentionally or not, result in widening income inequality; it has also been used in critical references to neoliberalism. These critics reject the notion that spending by this elite group would "trickle down" to those who are less fortunate and lead to economic growth that will eventually benefit the economy as a whole.

While criticisms have existed since at least the 19th century, the term "trickle-down economics" was popularized by Democrats in the US to derogate Reaganomics and its reduction in the top marginal tax rates.

Major examples of what critics have called "trickle-down economics" in the US include the Reagan tax cuts, the Bush tax cuts, and in UK include Margaret Thatcher's economic policies in the 1980s and Liz Truss's mini-budget tax cuts of 2022.

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