Dr David Hope: Major tax cuts for the rich do not generate growth
The Finnish progressive think tank Kalevi Sorsa Foundation organized a tax seminar Veroareena in Helsinki on 24 February 2023. The keynote speaker of the event was Dr David Hope from King’s College London. Video of his presentation can be watched on our YouTube channel.
Dr David Hope is currently a Visiting Senior Fellow at the LSE International Inequalities Institute. In his research, he has focused on e.g. the relationship between taxation, inequality and growth. In 2022, he published the article The economic consequences of major tax cuts for the rich with Dr Julian Limberg. The study has been covered by various major media outlets internationally (see. e.g. Bloomberg, Financial Times, Washington Post).
The article studies statistically the economic effects of major tax reductions on the rich in 18 OECD countries between 1965 and 2015. It shows that the tax reductions have not had a significant effect on economic growth or unemployment. However, income inequality has increased. The research therefore provides additional evidence against so-called trickle-down effect whereby tax cuts for the rich would trickle down to others and boost the wider economy.
Dr Hope also presented his other recent studies, in which he has e.g. analysed the impact of top income tax cuts on the financial sector. A co-article with Limberg and Nina Weber published November last year studies how information shifts ordinary citizens preferences on taxation. The empirical study was based on surveys conducted in the United States. The results indicate that support for taxing the rich could significantly increase if ordinary citizens were informed that a lot of the rich inherited their wealth and that taxes on the rich have come down dramatically in recent decades.
Dr Hope concluded by presenting policy recommendations based on his research as well as assessing the prospects of taxing the rich in the United Kingdom. He deems tax cuts for the rich would be bad policy to aid recovery from the Covid-19 pandemic and the war in Ukraine.
Veroareena is an annual seminar for researchers and experts involved in tax policy that discusses latest research as well as topical issues on taxation. The next Veroareena will be held early 2024 in Helsinki.
The theme of the first Veroareena 2023 was taxation and inequality. Other speakers at the event were professor Kaisa Kotakorpi from Centre of Excellence in Tax Systems Research, professor Pekka Nykänen from University of Tampere, Dr Anna Rajavuori from Kalevi Sorsa Foundation and professor (emeritus) Matti Tuomala from University of Tampere. Videos of their presentations will be published soon.
Veroareena also included debates involving Minister of Transport and Communications Timo Harakka (SDP), MP Matias Marttinen (NCP), Director General of the Tax Department at Ministry of Finance Terhi Järvikare ja the foundation’s director Lauri Finér.