The passage of Donald Trump’s One Big Beautiful Bill Act (OBBBA) in 2025 has sparked considerable debate about its implications for the US economy, particularly concerning tax equity and the impact on public services. The legislation, which includes a staggering $5 trillion in tax reductions alongside over $1 trillion in cuts to essential programmes like food assistance and Medicaid, has been framed by supporters as a boon for small businesses. However, critics argue that it disproportionately favours the affluent, perpetuating a cycle of wealth concentration at the expense of vital government revenue.
The Tax Cut Myth
House Speaker Mike Johnson asserted that the OBBBA was not about enriching millionaires but rather about supporting “small business owners” who create jobs across the country. This narrative, however, glosses over the reality that a significant portion of the tax benefits is flowing to the wealthiest individuals in the nation. The legislation primarily favours “pass-through” businesses, which represent about 95% of all US businesses, employing half of the workforce and generating more than half of national business income.
Unlike traditional corporations, pass-through entities do not pay the corporate income tax rate. Instead, their profits are distributed to owners who often face lower individual tax rates, resulting in substantial savings. This system, while designed to stimulate entrepreneurship, has led to a significant loss in tax revenue, effectively subsidising the lifestyles of the wealthy.
The Disproportionate Gains of the Affluent
Recent research from the Urban-Brookings Tax Policy Center reveals that a staggering 57% of pass-through income in 2022 was claimed by the top 1% of earners, totalling approximately $1.3 trillion. This trend was further emphasised in a study by economists affiliated with the Department of the Treasury, which found that 35% of the deductions claimed in the aftermath of the 2017 Tax Cuts and Jobs Act—amounting to $54 billion—benefited individuals earning over $1 million.
This raises questions about the motivations behind the political support for such tax breaks, particularly among Republican lawmakers who have a vested interest in these financial structures. For instance, Senator Ron Johnson, who has publicly advocated for pass-throughs, previously owned a stake in a pass-through entity that contributed to his substantial wealth.
The Influence of Main Street Millionaires
While the focus on billionaires has dominated the discussion around wealth and power in the United States, the influence of “Main Street millionaires”—those with net worths exceeding $10 million—has largely gone unnoticed. According to forthcoming research by economists Owen Zidar from Princeton and Eric Zwick from the University of Chicago, there are over 4,000 Main Street millionaires for every billionaire listed in the Forbes 400. Collectively, they possess a staggering $46.7 trillion in wealth, making them a formidable force in American politics.
These affluent individuals are not only politically active but also play significant roles in shaping legislation that benefits their financial interests. Wealthy car dealers, real estate developers, and medical professionals have been known to leverage their financial clout to influence policies and maintain monopolistic practices within their industries. For example, the pass-through deduction granted under the OBBBA has effectively lowered the top tax rate for these individuals to 29.6%, compared to 37% for wage earners.
A Broader Impact on Society
The implications of these tax policies extend far beyond wealth distribution. For instance, a freeze on Medicare-funded residency positions in 1997, influenced by medical professionals, has led to a severe shortage of doctors in the US. Currently, the country has only 2.7 doctors per 1,000 people, compared to 3.7 in other OECD nations. This shortage contributes to poor healthcare access, particularly for low-income families who rely on public health programmes.
Similarly, car dealers and real estate brokers benefit from protective laws that limit competition and restrict new market entrants. By preventing automakers from selling directly to consumers and maintaining high fees for listing services, these practices raise costs for consumers while ensuring substantial profits for the few.
Tax cuts may be a primary concern for these affluent groups, but the deeper ramifications of such policies threaten the very fabric of American society.
Why it Matters
The implications of Trump’s One Big Beautiful Bill Act highlight a growing divide in the US economy, where tax policies increasingly favour the wealthy while undermining essential public services. As the wealth gap continues to widen, the burden on average Americans grows heavier, casting doubt on the sustainability of current economic policies. Understanding the intricate relationships between tax laws, wealth concentration, and public welfare is crucial for fostering a more equitable and thriving society.