The One Big Beautiful Bill Act paired a $5tn-plus tax cut with over $1tn in cuts to food stamps and Medicaid, defended by House Speaker Mike Johnson as help for 'small business owners' rather than millionaires. Those small businesses are pass-through entities, which make up 95% of US businesses, employ half the workforce, and let owners skip corporate tax rates in favor of lower individual ones.
The permanent 20% pass-through deduction will cost the budget $820bn over ten years, nearly matching the Medicaid cuts. Per the Urban-Brookings Tax Policy Center, 57% of the $1.3tn in pass-through income in 2022 went to the richest 1%, and Treasury/Fed/Dartmouth economists found 35% of deductions the year after the 2017 cut flowed to millionaires.
Senator Ron Johnson, who pushed to raise the deduction from 17% to 20%, sold his own pass-through plastics stake for up to $25m and built a $40m fortune. Upcoming research from Princeton and University of Chicago economists estimates 'Main Street millionaires' worth $46.7tn collectively, nearly 12 times the wealth of the Forbes 400 billionaires, and finds their political footprint — via realtor, beer wholesaler and auto dealer PACs — arguably exceeds that of the ultra-rich.
The full dispatch is available from the source below.