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Moving Past the Failed Trickle-Down Experiment

Trickle-down economics have failed to deliver higher overall income growth; the middle class needs active policy solutions that produce inclusive prosperity.

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idea_bulbUniversity of California, Berkeley, economist Emmanuel Saez has updated his frequently cited income data. And despite relatively good news about 2014, the picture they paint of the recovery is as predictable as it is discouraging. As of 2014, the top 1 percent of Americans have seen 58 percent of the gains in the economic recovery, while the average real income of the bottom 90 percent has grown just 1.6 percent since the recovery began in 2009.* These findings coincide with new data from the IRS showing that the top 0.01 percent received 5.6 percent of adjusted gross income in 2012.

These developments are the result of an extended experiment in trickle-down economics—the theory that tax cuts, deregulation, and the destruction of basic labor protections would unleash a wave of economic growth. A smaller share of the pie would go to most Americans, but they would be better off because these policies would grow the overall pie. The experiment has failed.

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