In a sweeping move, the House of Representatives recently approved Donald Trump’s One Big Beautiful Bill Act (OBBBA), which promises over $5 trillion in tax reductions while simultaneously slashing more than $1 trillion from essential programmes like food stamps and Medicaid. House Speaker Mike Johnson defended the legislation, asserting that it primarily benefits small business owners who are the backbone of American employment. However, this narrative obscures the reality that the legislation largely favours the affluent, particularly millionaires and billionaires, at the expense of broader economic health.
A Closer Look at Pass-Through Businesses
Johnson’s comments highlighted the popular notion of the hardworking small business owner, but this picture is skewed. The OBBBA significantly favours “pass-through” businesses—entities that allow profits to be taxed as individual income rather than corporate earnings. Accounting for 95% of U.S. businesses, these structures employ half of the workforce and generate more than half of national business income. Yet, because they evade the corporate tax rate, their profits are distributed to owners who then benefit from lower individual tax rates, resulting in substantial savings for the wealthy.
This system has been staunchly defended by Republican lawmakers. For instance, Senator Ron Johnson of Wisconsin threatened to withhold his support for Trump’s Tax Cuts and Jobs Act in 2017 unless the tax deduction for pass-through income was increased from 17% to 20%. This deduction, now made permanent in the OBBBA, is projected to cost the federal budget around $820 billion over the next decade—almost equal to the cuts made to Medicaid.
The Wealth Disparity: Who Really Benefits?
Statistics reveal that a staggering 57% of the $1.3 trillion in pass-through income in 2022 flowed to just 890,000 individuals in the top 1% of earners, according to the Urban-Brookings Tax Policy Center. A research collaboration involving the Department of the Treasury, the Federal Reserve Bank of Minneapolis, and Dartmouth University found that 35% of the total deductions in the year following the 2017 tax cuts—equating to $54 billion—benefited taxpayers earning over $1 million annually.
The political influence of these wealthy individuals cannot be overlooked. For every billionaire listed in Forbes’ top 400, there are over 4,000 millionaires worth at least £10 million, holding a collective net worth of approximately £46.7 trillion—nearly twelve times that of the billionaires. This vast wealth translates into considerable political clout, enabling them to shape policies that favour their financial interests.
Political Influence of Main Street Millionaires
While billionaires often dominate headlines, it is these affluent millionaires who may wield more significant influence within the political landscape. Their political action committees (PACs), representing industries such as real estate, beer distribution, and automotive sales, rank among the top contributors in the current election cycle. Additionally, many of these millionaires engage directly in politics, serving on committees that shape tax policy—like House members Don Beyer, Vern Buchanan, and Mike Kelly.
The implications extend beyond mere tax breaks. Historical decisions, such as the 1997 freeze on Medicare-funded residency positions, illustrate how entrenched interests can manipulate regulations to restrict competition and limit access to services. This has contributed to a significant doctor shortage in the U.S., with only 2.7 physicians per 1,000 people, compared to 3.7 in other OECD nations. Alarmingly, 26% of American doctors belong to the wealthiest 1%, a stark contrast to only 5% in Sweden.
The Broader Implications for Society
The ramifications of such legislation go deeper than tax savings for the wealthy. It is crucial to recognise how entrenched interests exploit their power to create barriers that protect their profitability. For instance, car dealers benefit from laws that prevent new market entrants, while real estate brokers maintain monopolistic controls over property listings. These practices hinder competition, drive up costs for consumers, and ultimately perpetuate economic inequality.
While the narrative may paint Trump as a champion for the average American, his policies often disproportionately favour those already sitting atop the economic pyramid. The One Big Beautiful Bill, while wrapped in the guise of support for small business, directs substantial resources to the upper echelons of wealth, revealing a stark reality about the priorities of American taxation and governance.
Why it Matters
Understanding the dynamics of Trump’s One Big Beautiful Bill Act is crucial for grasping the broader implications for economic equity in the United States. As tax policies increasingly favour the wealthy—particularly through loopholes and deductions that benefit millionaires—the gap between rich and poor widens. This not only threatens the fabric of American democracy but also undermines the very idea of a meritocratic society where opportunities are accessible to all. The stakes are high, and the need for reform is urgent if we are to create a fairer economic landscape for future generations.