Trickle-down economics, also referred to as trickle-down theory, is an economic theory that advocates reducing taxes on businesses and the wealthy in society as a means to stimulate business investment in the short term and benefit society at large in the long term.
When it works, wealth created by the rich will trickle down to the middle-class and poor. Hence, the name trickle-down economics.
Strangely, one of the richest man in U.S, Warren Buffett, does not seem to think so. Why have trickle-down economics failed to trickle down to the middle-class and poor in recent years?
Buffett says there is a problem with that economic system, which made him a king: Many individuals suffer even as those at the top prosper wildly.
He points to the Forbes 400, which lists the wealthiest Americans. "Between the first computation in 1982 and today, the wealth of the 400 increased 29-fold — from $93 billion to $2.7 trillion — while many millions of hardworking citizens remained stuck on an economic treadmill. During this period, the tsunami of wealth didn't trickle down. It surged upward."