Trickle-down revisited.

This article examines the concept of "trickle-down" ideas through the lens of tax incidence, which studies how tax policies affect the distribution of welfare across different income groups. It highlights three key findings from recent empirical research: first, business income taxes influence worker earnings primarily by taxing economic rents and through rent-sharing mechanisms between firms and workers; second, the burden of these taxes on workers is unevenly distributed, falling mainly on higher-earning workers rather than rank-and-file employees; and third, for various tax policies targeting the wealthy, the tax burden is predominantly borne by the rich themselves, though responses vary by tax type and taxpayer characteristics. The article also discusses the limited evidence for substantial trickle-down effects via supply-side growth channels, the importance of labor and product market structures in shaping tax incidence, and the need for further research on long-term effects, heterogeneity in responses, and the interaction between tax and labor market policies.