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Listening to critics on Capitol Hill and in the mainstream media would make observers believe that the One Big Beautiful Bill (OBBB) contained only one line of text: cutting taxes for billionaires. The more than 1,000-page budget reconciliation bill has come under fire as a handout for affluent Americans, with opponents alluding to estimates, for example, from the Joint Committee on Taxation. With the Senate Finance Committee unveiling its portion of the bill on Monday evening, June 16, critics are doubling down on this wealth giveaway moniker. But is this an accurate description of what the White House says is one of the most significant pieces of legislation crafted in US history?
Treasury Secretary Scott Bessent sparred with Democratic lawmakers in the House and Senate during a pair of hearings last week. In one instance, at the June 12 Senate Finance Committee hearing, Sen. Bernie Sanders (I-VT) asserted that President Donald Trump’s tax cuts will go to “the very, very, very richest” people in America. “This is nothing more than a gift to billionaires in this country,” Sanders said.
Several lawmakers cited the Joint Committee on Taxation (JCT) – a nonpartisan congressional committee tasked with reviewing and analyzing tax policy – to support their point. However, a deeper dive into the JCT’s 16-page May 13 report revealed the average tax rate decreases for most Americans. Here is a breakdown of what the analysis shows:
The average tax rate in the income category of less than $15,000 would rise from 4% to 4.8%. According to the JCT report, this is because the measure of income is adjusted gross income in addition to various transfer payments, including non-taxable Social Security benefits or the insurance value of Medicare benefits. Based on the outlined average tax rates, most Americans are receiving tax breaks, and two-thirds of the country would not suffer a tax hike.
Remember, the One Big Beautiful Bill also exempts taxes on tips and overtime pay, components that favor non-millionaires and billionaires (only workers earning less than $160,000 can qualify for the tax exemptions). This is in addition to interest-free automobile loans for vehicles manufactured domestically and $1,000 baby bonuses. So, while the deficit is something to worry about, the claim that the president’s extension of the 2017 Tax Cuts and Jobs Act (TCJA) is only going to the top 0.01% is not based on the very reports that OBBB adversaries are citing.
Lawmakers lambasting the One Big Beautiful Bill purport that Trump and GOP lawmakers want to deteriorate America’s fiscal outlook by lowering taxes for the ultra wealthy. Let’s say that the legislation achieves this aim and explicitly determines that tax cuts will only benefit the top 0.2%, as Sanders projected last week. Similar arguments were made when Washington was ensconced in the TCJA debate several years ago – and they aged like milk.
The US government is collecting more than $5 trillion in annual tax receipts, an all-time high. This is worth noting because the JCT and the Congressional Budget Office (CBO) predicted that the Tax Cuts and Jobs Act (TCJA) would increase the deficit by $1.5 trillion over ten years. However, as Liberty Nation News has reported, the CBO and JCT overestimated revenue loss by approximately $1.5 trillion in the first five years of the TCJA. In other words, tax cuts fueled economic growth, which in turn filled government coffers. Oh, hello, Laffer Curve.
This should, in theory, lead to a balanced budget. Instead, Uncle Sam is spending a record $7.1 trillion, which is expected to accelerate to $10 trillion within the next decade. It is a trope at this point, though it still falls on deaf ears in the corridors of power: Washington does not have a revenue problem, it has a spending program.
Why won’t millionaires and billionaires pay their fair share? One facet of the TCJA that progressive lawmakers want to ignore is that the legislation was quite, well, progressive, based on IRS data. First, the share of taxes paid by the top 10% went up (70% to 76%). Second, the tax cuts disproportionately benefited the working class. Will Trumponomics 2.0 emulate Trumponomics 1.0? The Laffer Curve will be tested again, and the nation will likely engage in the same tax policy discussion in the next decade.