December 17, 2020
Andrew Campbell
According to a research publication released by Dr. David Hope in International Inequalities Institute of the London School of Economics (LSE) and Dr. Julian Limberg in Public Policy at King's College London, it is concluded that cutting taxes on the rich has little effect on economic performance, as measured by per capita real GDP and the unemployment rate.
The research entitled “The Economic Consequences of Major Tax Cuts for the Rich” compared 18 member countries in the Organization for Economic Co-operation and Development (OECD) that had major tax cuts on the rich in a given year with those that did not at the same time. The comparisons referred to the economic database of Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, Netherlands, New Zealand, Norway, Sweden, Switzerland, the UK, and the US from 1965 to 2015 statistically over the last 5 decades.
The argument to promote tax cuts for the rich indicates that it can lead wealthy people to invest or work more, improve economic activity, and benefit the economy. For years, some researchers have criticized large tax cuts for the rich do not lead to economic growth and employment rate, but instead widen income inequality.
However, the findings of Hope and Limberg seemingly encourage governments to seek finances amid the COVID-19 crisis by implying that the economic consequences of raising higher taxes on the rich have little effect on economic performance.
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