According to the trickle-down theory, cutting taxes can stimulate economic production.The idea is that slashing marginal and capital gains tax rates—especially on rich corporations, investors and entrepreneurs—leads to increased investment. Businesses hire more workers to produce more goods, and pay higher wages. Benefits then trickle down throughout the economy. Lower taxes entice people to work more since they keep more of what they earn. Those earnings are spent and invested, spurring growth and wealth. In the end, everyone—not just the rich—enjoys more prosperity. And because of the additional production, governments collect more taxes despite the lower rates. But trickle-down theory is widely debated. Detractors say the policy only benefits the rich, not lower-income earners. They point to growing income inequality as proof that the rich getting richer doesn’t benefit others. Trickle-down theory also doesn’t support government intervention, which is the basis of the Keynesian view on stimulating economic demand.