Not All That “Trickles Down” Is Rain

Source: Institute on Taxation and Economic Policy, Tax Justice blog, March 9, 2015

This is the second post in our series outlining state tax trends being debated during 2015 legislative sessions. Our first post focused on tax shifts. The theory that tax cuts for the affluent will eventually trickle down to everyone else is shopworn, yet supply-side adherents keep promising the public that the rich can have their tax cuts and the rest of us will eat cake too. … At least 10 states have tax cut proposals in motion, and the overwhelming majority will reduce taxes for the best off while doing nothing or little for everyone else, making a regressive tax landscape worse. Gov. Asa Hutchinson’s overhaul of his state’s income tax and Mississippi Gov. Phil Bryant’s proposal to introduce a state Earned Income Tax Credit (EITC) would actually benefit low- and moderate-income families, but most of the other proposals would lead mainly to benefits for the wealthy. Over time such tax cuts exacerbate income inequality and stymie opportunity for the masses. Taxes and spending are on a balance scale. Top-heavy tax cuts and their purported economic benefits do not trickle down a rolling hill; they tip the scale in favor of the rich while depriving states of necessary revenue to adequately fund basic services, including education, public safety, infrastructure health and other priorities. Below are some pending proposals: …..