The Wall Street Journal's economics blog has a posting headlined "Trickle-Down Economics Fails to Deliver as Promised" that itself fails to deliver on the headline.The Journal claims that a new paper from the Harvard Kennedy School debunks "Trickle-down economics, a centerpiece of conservative economic thinking for many decades." The Journal explains: "According to this theory, when government policies favor the wealthy — for example, via tax cuts for upper-income classes — the increase in wealth flows down to those with lower incomes. That's because the rich are more likely to spend the additional income, creating more economic activity, which in turn generates jobs and eventually, better paychecks for the less well-off. It's a school of thought that is closely linked to former President Ronald Reagan, and is frequently referred to as 'Reaganomics.' The idea has had enough power to be used as part of a long process to lower tax rates on the wealthiest Americans."
But the paper that the Journal is writing about doesn't mainly deal with an assessment of whether cutting taxes on the rich helps everyone else. What it mainly looks at is the pre-tax share of the top 1% and top 10% of earners and how that share affects overall economic growth. The idea that a greater pre-tax share of income by a few would increase overall economic growth is hardly a staple of the thinking of conservatives or of Ronald Reagan. It would be illogical to use it to make the case for lower taxes, because you wouldn't need to fiddle with the taxes to affect pre-tax income.
The authors of the paper themselves concede that higher taxes on the rich may slow overall growth, writing, "increases in top income shares could also have political consequences that reduce future growth. ...If increases in top income shares lead to taxes or transfer payments that distort economic decisions regarding investment or labor supply, investment in both physical and human capital may fall, lowering growth." They also allow that "Low taxes on either capital gains or income from assets may encourage investment, for example, which may raise both the growth rate and the share of income going to the rich." Sounds like Reaganomics, there.
If anything, the authors debunk a claim of left-wing economic commentators, which is that allowing the rich too big a share of the pie is bad for everyone. They say their findings appear to rule out the claim that a rise in the top income shares "causes a large short-term increase or decrease in economic growth." [Emphasis ours]. "The claim that inequality at the top of the distribution either benefits or harms everyone therefore depends on long-term effects that we cannot estimate very precisely even with these data." [Emphasis ours]. The Journal summary left out that finding.