Supporters of tax cuts for the wealthy have long claimed that they lead to economic growth. The evidence is in: They don’t. High-end tax cuts have failed to meaningfully grow our economy, but they do grow our divides — economic and political.
Over the past four decades, repeated reductions in the average federal tax rates paid by the wealthiest Americans have contributed significantly to rising income inequality. These tax cuts disproportionately benefit the richest individuals, increase the cost of the federal debt, and leave less revenue for public programs that could support hundreds of millions of Americans.
And that hurts our democracy, too.
When they pay less in taxes, wealthy individuals and corporations have more to spend on flexing their political power, influencing elections through campaign contributions and policy decisions by lobbying. This concentration of power allows a small elite to shape policies in their favor while sidelining the broader public interest.
Unsurprisingly, this inequality also fosters social division. As wealth becomes increasingly concentrated, public trust in government erodes and social cohesion weakens. People may feel disenfranchised and alienated, perceiving that the system is rigged against them. This can lead to increased polarization and conflict.
The research bears this out. While the relationship is complex, evidence suggests that growing income inequality has intensified our political polarization, partly by aligning political parties with bases whose economic interests may seem to diverge more and more. And this is a worldwide problem, with a similar trend appearing in recent European elections as well.
