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The recent enactment of Donald Trump’s One Big Beautiful Bill Act (OBBBA) has ignited a complex dialogue about the implications of tax policy in the United States. While touted as a boon for small business owners, the legislation primarily benefits a select group of affluent individuals, exacerbating income inequality and distorting the very fabric of American capitalism. Through substantial tax cuts and deductions, the OBBBA has reshaped the economic landscape, favouring the wealthy while undermining government revenue.
Tax Cuts for the Wealthy: A Closer Look
In August 2026, following the House’s passage of the OBBBA, House Speaker Mike Johnson claimed that the legislation was not designed to provide tax breaks to millionaires but rather to support small businesses that drive job creation across the nation. This narrative, however, masks a more complicated reality. The vast majority of businesses in the United States, approximately 95%, operate as “pass-throughs,” entities that allow profits to be distributed directly to owners, bypassing the corporate tax rate. This system significantly benefits wealthy individuals, often at the expense of broader economic health and government funding.
The tax code, as it stands, allows these pass-through owners to pay taxes at lower individual rates, resulting in billions saved annually. This structure has garnered support from Republicans, as evidenced by Senator Ron Johnson’s insistence on increasing the tax deduction for pass-through income during the 2017 Tax Cuts and Jobs Act negotiations. The deduction, now a permanent feature of the tax landscape, is projected to cost the federal budget around $820 billion over the next decade—nearly equivalent to cuts made to essential social services such as Medicaid.
The Impact of Pass-Through Income
Recent data from the Urban-Brookings Tax Policy Center reveals that a staggering 57% of the $1.3 trillion in pass-through income for 2022 was allocated to the wealthiest 1% of Americans, amounting to roughly 890,000 individuals. This concentration of wealth is further corroborated by a study from prominent economists at the Department of the Treasury, the Federal Reserve Bank of Minneapolis, and Dartmouth University, which found that 35% of deductions following the 2017 tax reforms—totalling $54 billion—benefited taxpayers earning over $1 million annually.
The implications of these findings are multifaceted. While Johnson’s rhetoric paints a picture of the humble entrepreneur, the reality is that many of these affluent individuals are leveraging tax policies to secure their financial positions. For instance, Johnson himself has ties to pass-through entities, having sold a stake in a plastics company for millions. This raises questions about the motivations behind the political advocacy for such measures.
The Rise of the “Everywhere Millionaires”
In an upcoming analysis by economists Owen Zidar from Princeton and Eric Zwick from the University of Chicago, a new category of wealth—the “everywhere millionaires”—is being documented. These individuals, often seen as the backbone of local economies, include professionals such as dentists, insurance agents, and real estate developers, all of whom have established their businesses as pass-through entities. The study reveals that for every billionaire in the Forbes 400, there are over 4,000 millionaires with a net worth exceeding $10 million, collectively holding assets amounting to a staggering $46.7 trillion.
This burgeoning class of affluent individuals wields significant political influence, often operating beneath the radar compared to their billionaire counterparts. Political action committees (PACs) associated with industries heavily populated by these millionaires, such as real estate and automotive, rank among the top contributors in recent election cycles, underscoring their capacity to shape policy in their favour.
The Broader Economic Consequences
The ramifications of such tax policies extend beyond mere financial implications. By prioritising the interests of the wealthy, the OBBBA perpetuates systemic inequities that hinder competition and innovation across various sectors. For instance, regulations benefiting established industries often protect them from new entrants, as seen in the automotive sector, where franchise laws restrict market access for new dealerships. Similarly, real estate agents leverage monopolistic practices to maintain inflated fees, limiting affordability for consumers.
The healthcare sector faces similar constraints, with the 1997 decision to cap Medicare-funded residency positions resulting in a shortage of physicians. This has led to a disparity in healthcare access, with the U.S. falling behind other OECD nations in doctor-to-population ratios, further entrenching inequality in health outcomes.
Why it Matters
The implications of the One Big Beautiful Bill Act extend far beyond tax cuts; they reflect a profound shift in the balance of power within the American economy. By prioritising the interests of the wealthy and concentrating financial benefits in the hands of a few, the legislation threatens to entrench a system that undermines fair competition and equitable growth. As the political influence of these “everywhere millionaires” grows, the challenge remains to address the systemic issues that perpetuate inequality and ensure a more balanced economic future for all.
