What economic theory emphasizes tax cuts for the wealthy to stimulate growth?

The economic theory that emphasizes tax cuts for the wealthy to stimulate growth is supply-side economics.

Supply-side economics argues that long-run growth depends on expanding an economy’s productive capacity, or aggregate supply. Its advocates commonly support lower marginal tax rates, deregulation, investment incentives, and freer trade on the grounds that these policies can encourage work, saving, entrepreneurship, and investment. Because high-income taxpayers often face the highest marginal rates and own substantial capital, supply-side proposals have frequently emphasized tax cuts for wealthy individuals and businesses.

The school became especially influential in the United States during the late 1970s and early 1980s. Arthur Laffer popularized the Laffer curve, which illustrates the idea that tax revenue can eventually fall when tax rates become high enough. The curve does not show that every tax cut pays for itself; its revenue-maximizing rate is not supplied by the diagram.

Supply-side economics is often confused with demand-side economics. Demand-side policies try to raise total spending, while supply-side policies aim to improve incentives and productive capacity. Critics argue that tax cuts for the rich may produce smaller growth effects than promised and can reduce public revenue and increase inequality.