Wealthy Americans substantially benefit from the tax proposal of the Republican House, detailing their potential gains and reasons behind this bias.
The contrasting effects of a sweeping legislative package, known as the "One Big Beautiful Bill Act," passed Thursday by House Republicans, are expected to favor the wealthy, according to experts. The legislation, estimated to cost around $4 trillion or more, features tax cuts primarily allocating benefits to business owners, investors, and high-tax area homeowners.
Conversely, low-income households stand to suffer, as Republicans partially offset these tax cuts with reductions to social safety net programs like Medicaid and the Supplemental Nutrition Assistance Program (SNAP). According to the Congressional Budget Office (CBO), income for the bottom 10% of households is estimated to decline by 2% in 2027 and 4% in 2033 as a result of the bill. By contrast, those in the top 10% would see an increase of 4% in 2027 and 2% in 2033, the CBO found.
The Yale Budget Lab's analysis shares a similar outlook. The bottom 20% of households, earning less than $14,000 annually, would experience an average decrease of $800 in 2027, while the top 20% earning over $128,000 annually would see their incomes grow by an average of $9,700 in the same year. The top 1% would gain $63,000.
It is worth noting that these analyses do not include last-minute changes to the House legislation, including stricter work requirements for Medicaid. According to economist and director of economics at the Yale Budget Lab, Ernie Tedeschi, the legislation skews "pretty heavily toward the wealthy."
The regressive nature of the new legislation compounds the impact of the Trump administration's recent tariff policies, economists said. These tariffs disproportionately affect lower- and working-class families.
The bill's tax breaks are primarily directed at high earners, with more valuable tax exemptions tied to business income, state and local taxes, and the estate tax. These breaks predominantly benefit high earners. For instance, bottom 80% of earners would see no benefit from the House proposal to raise the SALT cap to $40,000 from the current $10,000, according to the Tax Foundation.
The bill maintains a lower top tax rate, set by the 2017 Tax Cuts and Jobs Act, which was set to expire at the end of the year. It also preserves a tax break that allows investors to shield their capital gains from tax by funneling money into "opportunity zones." Trump's 2017 tax law created this tax break, aiming to stimulate investment in lower-income areas. Taxpayers with capital gains are "highly concentrated" among the wealthy, according to the Tax Policy Center.
Overall, 60% of the bill's tax cuts would go to the top 20% of households, with more than a third going to those making $460,000 or more, according to the Tax Policy Center.
Although more than 8 in 10 households would receive a tax cut in 2026 if the bill is enacted, lower earners might not fully benefit due to the less valuable nature of some benefits or reduced access to crucial social safety net programs. On the other hand, a subset of high earners would pay more in tax.
The "One Big Beautiful Bill Act" could widen the gap between the rich and the poor by favoring wealthier individuals and corporations over those in need of government assistance.
- The One Big Beautiful Bill Act, passed by House Republicans, is expected to favor the wealthy, with tax cuts primarily for business owners, investors, and high-tax area homeowners, while low-income households could suffer due to reductions in social safety net programs.
- The analysis by the Yale Budget Lab predicts that the bottom 20% of households would experience an average decrease in income, while the top 20% would see their incomes grow significantly more, with the top 1% gaining $63,000.
- The bill maintains a lower top tax rate and preserves tax breaks, such as those for capital gains, that are primarily beneficial to high earners, with more than 60% of the tax cuts going to the top 20% of households.
- Despite more than 8 in 10 households receiving a tax cut if the bill is enacted, lower earners might not fully benefit, and a subset of high earners could pay more in taxes, potentially widening the gap between the rich and the poor.
