Donald Trump doesn’t just love billionaires, he loves multimillionaires too
Donald Trump's "One Big Beautiful Bill Act" disproportionately benefits millionaires and multimillionaires, particularly through pass-through business deductions, despite claims of aiding small business owners.
Intelligence analysis by Gemini 2.5 Flash Lite
The article argues that Donald Trump's "One Big Beautiful Bill Act" and similar Republican policies primarily serve the interests of wealthy individuals, especially "pass-through" business owners, rather than the small business creators they claim to support, leading to significant revenue loss for the government.
Imagine a special club for grown-ups who own businesses. This club gets a special discount on taxes, but mostly the people who are already very rich get to use it. It's like giving a big treat to people who already have lots of toys, instead of helping everyone share.
Analysis
The "Pass-Through" Advantage
The "One Big Beautiful Bill Act" (OBBBA), championed by Republicans, includes provisions that significantly benefit "pass-through" businesses. These entities, which constitute about 95% of businesses in the US, avoid corporate income tax by distributing profits directly to their owners, who are then taxed at individual rates. Republicans, notably Senator Ron Johnson, have advocated for these structures, with a 20% deduction for pass-through income being a key feature. This deduction, made permanent in the OBBBA, is projected to cost the federal budget over $800 billion in a decade. Data from the Urban-Brookings Tax Policy Center indicates that a substantial portion of pass-through income, over 57% in 2022, went to the wealthiest 1% of the population. Further research from Treasury, the Federal Reserve Bank of Minneapolis, and Dartmouth University suggests that 35% of the deductions from the 2017 tax cuts flowed to taxpayers earning at least $1 million annually.
The "Everywhere Millionaires"
Economists Owen Zidar and Eric Zwick are set to publish research detailing the prevalence of "everywhere millionaires" – individuals with a net worth of at least $10 million, who significantly outnumber billionaires. Their findings suggest that for every billionaire on the Forbes 400 list, there are over 4,000 such millionaires. Collectively, their net worth is estimated to be nearly 12 times that of the Forbes plutocrats. These individuals, encompassing professions like dentists, doctors, car dealers, lawyers, and real estate developers, are often organized as pass-through businesses. Their substantial wealth and organized interests give them considerable political influence. The article points out that political action committees (PACs) from industries like real estate, beer wholesaling, and automobile dealerships are among the top donors in recent election cycles, underscoring the financial clout of this demographic.
Broader Economic Distortions
The influence of these wealthy individuals extends beyond direct tax deductions. The article cites examples of how professional groups have lobbied for policies that limit competition and inflate incomes. For instance, doctors successfully lobbied to freeze Medicare-funded residency positions in 1997, contributing to a shortage of physicians in the US compared to other OECD countries. This scarcity helps explain why a significant percentage of American doctors fall into the top 1% of income earners. Similarly, car dealers benefit from franchise laws that restrict new dealerships from entering the market, protecting existing owners' profitability. These instances illustrate a pattern where policies, often framed in broader economic terms, are tailored to benefit specific wealthy groups, leading to reduced competition, higher prices for consumers, and a less dynamic economy overall.
Key points
- Donald Trump's "One Big Beautiful Bill Act" disproportionately benefits millionaires and multimillionaires.
- "Pass-through" businesses are a primary vehicle for wealthy individuals to receive significant tax cuts.
- The act's provisions, like the 20% deduction for pass-through income, cost the government billions and primarily serve the richest 1%.
- "Everywhere millionaires" with net worths of $10 million or more wield considerable political influence through donations and personal involvement.
- Lobbying by professional groups has led to policies that limit competition and inflate incomes for the wealthy, such as in the medical and auto dealership sectors.
If the "One Big Beautiful Bill Act" and similar policies were genuinely designed to foster broad-based economic growth, they could stimulate investment and job creation across various sectors. A more equitable distribution of tax benefits could lead to increased consumer spending and a healthier overall economy.
The current tax structure, heavily favoring high-income earners and "pass-through" businesses, risks exacerbating wealth inequality and reducing government revenue available for public services. This could lead to a less competitive economic landscape and slower growth for the majority of the population.
