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Trickle-down economics, or “trickle-down theory,” states that tax breaks and benefits for corporations and the wealthy will trickle down to everyone else. It argues for income and capital gains tax breaks or other financial benefits to large businesses, investors, and entrepreneurs to stimulate economic growth. The argument hinges on two assumptions: All members of society benefit from growth, and growth is most likely to come from those with the resources and skills to increase productive output.
Government tax affects the profitability, investment, employment. These aspects are dependent on government tax rates up to some extent. The less government tax rates will decrease the costs to companies because it is an expenditure for the company which will decrease the costs and it will increase the profits of the company. When a company earns more profits then it will distribute the share of this profit among the shareholders which will benefit the shareholders. It will also benefit the society because the company will involve in philanthropic activities which are for the welfare of the society. It will also increase investments in the corporation which will create more jobs in the country because when the investment increases then the company hires more employees which increases employment. It will not benefit only the shareholders but the company and the society also because more profits will lead to more welfare schemes, more facilities and more remuneration or salary to the employees. It will also benefit the society because the company will donate it's time, labour and money for the welfare of the society and will fulfill its social responsibility. So tax cut leads to welfare of society, more profits of company, more investments, more jobs, more facilities and benefits to employees and more profits to shareholders.
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