The 50-Year Experiment

For about fifty years, we've been running an economic experiment: cut taxes on the wealthy, and the benefits will trickle down to everyone else. That theory has dominated Washington since 1981.

Did it work?

Researchers at the London School of Economics studied fifty years of tax cuts across eighteen wealthy countries. They found one reliable result: the rich got richer. Inequality went up. Growth and unemployment — no measurable effect at all.

Here at home, incomes grew together across every class from 1947 to 1974. Since then, the top one percent's share has more than doubled while the bottom ninety percent's has fallen. The RAND Corporation puts the cumulative transfer at nearly eighty trillion dollars.

Here's the part that stuck with me. The same researchers asked why Americans support these policies — and found most people simply don't know how far taxes on the rich have fallen. When you tell them, support drops. That effect was strongest among Republicans.

The experiment is over. The results are in. It didn't trickle down. It was siphoned up.

Learn More

The eighteen-country study. David Hope (London School of Economics) and Julian Limberg (King's College London), "The Economic Consequences of Major Tax Cuts for the Rich," published in Socio-Economic Review, Volume 20, Issue 2 (April 2022), pages 539-559, after circulating as an LSE International Inequalities Institute working paper in December 2020.

The authors built a new indicator of taxes on the rich — one that captures changes to the tax base, not just statutory rates — and used it to identify every instance of major tax reduction on the rich across 18 OECD democracies between 1965 and 2015. Their finding: "major tax cuts for the rich increase the top 1% share of pre-tax national income in the years following the reform. The magnitude of the effect is sizeable; on average, each major reform leads to a rise in top 1% share of pre-tax national income of over 0.7 percentage points." And: "such reforms do not have any significant effect on economic growth or unemployment. Our results therefore provide strong evidence against the influential political-economic idea that tax cuts for the rich 'trickle down' to boost the wider economy."

The study also documents the scale of the shift itself: from the late 1960s to the end of the 1990s, the average value of the taxing-the-rich indicator across the sample fell by more than 30%. (Socio-Economic Review; LSE working paper, full text; LSE summary; CBS News)

The follow-up study, and the script's close. Hope and Limberg subsequently investigated why ordinary Americans support tax cuts for the rich. Hope, summarizing: "The average citizen seems to be fairly poorly informed that taxes on the rich have fallen really dramatically in the past 40 years. If you give them that information, it makes them less likely to support tax cuts for the rich. And these effects, we've found, are particularly strong for Republican voters."

This is the basis for the script's fourth paragraph. It is worth keeping for two reasons: it reframes the disagreement as an information gap rather than a values gap, and the Republican-voter finding is a meaningful signal for a show that could otherwise be dismissed as partisan. (LSE Research)

The RAND figure — updated. The original Carter C. Price and Kathryn Edwards working paper (RAND, September 2020) calculated that $47 trillion had been transferred from the bottom 90% to the top 1% between 1975 and 2018, a figure widely rounded to $50 trillion. In 2018 alone the gap was $2.5 trillion — roughly 12% of GDP, or about $1,144 a month for every worker in the bottom nine deciles.

RAND has since updated the analysis through 2023, and the cumulative figure is now $79 trillion — nearly $80 trillion — with $3.9 trillion transferred in 2023 alone. The script previously used the older $50 trillion number and was corrected in August 2026. Related finding: average real income in the top 1% grew 321.6% from 1975 through 2018, nearly three times the 118% growth in real per capita GDP over the same period. (TIME, on the original study; Democracy Journal; Forbes; RAND update via Sen. Sanders' office summary)

The 1947-1974 baseline. Price and Edwards use 1945-1974 as the comparison period, during which income growth was broadly shared across the distribution. The script's "1947 to 1974" is within that window. The counterfactual the study models is simply that those distributions had held steady rather than diverging after 1975.

Why 1981. The script dates the theory's dominance in Washington to 1981 — the Economic Recovery Tax Act, which cut the top marginal rate from 70% to 50%. See also CM-79 ("One Direction") for the full rate timeline and CM-80 ("The Napkin") for the Laffer curve, which is the intellectual argument this script is testing empirically.

The counterargument. Defenders of these policies argue the studies suffer from attribution problems: the period since 1975 also saw globalization, automation, the decline of unionization, and the entry of China into world markets, any of which could account for the divergence independent of tax policy. Hope and Limberg's design addresses this by comparing countries that enacted major cuts against those that didn't in the same years — a difference-in-differences approach — which is why the paper carries more weight than a simple before-and-after of U.S. data. Critics also note that the top 1% share of pre-tax income rising is not the same as everyone else becoming worse off in absolute terms; real median incomes did grow over the period, if slowly. The RAND counterfactual measures the gap against what broadly-shared growth would have produced, not against a decline.

Related PM scripts: Who Actually Pays, Two Tax Codes, Corporate Welfare, The Minimum Wage. Related Civic Minute segments: One Direction, The Napkin, The Ledger, The Burden by the Numbers.