CBO says Trump’s tax law hurts poor, benefits rich
A recent analysis from the Congressional Budget Office indicates that President Donald Trump’s tax and spending law will impose a financial burden on the lowest-income Americans, while simultaneously enhancing the income of more affluent households.
The analysis of the “One Big Beautiful Bill Act” indicates that the poorest 10 per cent of households will experience an average loss of approximately $1,200 in resources annually, representing a 3.1 per cent reduction in their income. Households in the top decile of income distribution are projected to experience an average increase in resources of approximately $13,600, which corresponds to a 2.7 percent rise in their overall income levels.
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The impact on lower-income households will primarily stem from the reduction in benefits associated with social spending initiatives, whereas a significant portion of the advantages for affluent individuals will derive from tax incentives and monetary transfers, as noted by the CBO. In recent weeks, Trump and his allies have criticized independent agencies for disseminating data that contradicts the administration’s views. The nonpartisan CBO, under the leadership of Phillip Swagel, who previously served in the administration of Republican President George W. Bush, has faced ongoing scrutiny regarding its growth forecasts.
The recently enacted tax and spending bill incorporates a significant portion of Trump’s economic agenda. The proposal prolongs the income tax reductions initiated in 2017, while also introducing several new and expanded tax incentives. These include an increased limit on federal deductions for state and local taxes, a more generous child tax credit, and the elimination of taxes on tips and overtime compensation. The legislation aims to mitigate certain expenditures by implementing reductions in clean energy initiatives and social spending programs, such as Medicaid and food assistance.
Critics, including Democrats, have condemned the legislation for favoring affluent individuals while disadvantaging low-income families. The reduction of the social safety net occurs in conjunction with an economic deceleration and a deterioration in the labor market, which would amplify the significance of those benefits. Experts have cautioned that price hikes resulting from tariffs would have a disproportionate effect on lower-income Americans, who allocate a greater portion of their income to essential goods, including food. Recent surveys indicate that a significant portion of the electorate expresses discontent with the tax legislation, as evidenced by 55 percent of respondents opposing it in a Quinnipiac University poll and 61 percent in dissent according to a CNN/SSRS poll.
The reduction in resources for lower-income families is expected to be postponed, as the legislation crafted by Republicans stipulates that numerous cuts to social spending programs will not be implemented until after the 2026 midterm elections, whereas the tax reductions will become apparent early next year. The legislation establishes additional work obligations for able-bodied Medicaid recipients, restricts states’ capacity to levy taxes on healthcare providers to finance the program, and introduces new cost-sharing regulations for beneficiaries enrolled in the Affordable Care Act expansion. The Congressional Budget Office projects that 10 million individuals will be uninsured by 2034 as a result of modifications to Medicaid under the law.
The legislation introduces additional work requirements for the Supplemental Nutrition Assistance Program, commonly known as food stamps, while providing exceptions for Alaska and Hawaii. The Congressional Budget Office projects that these requirements will lead to a decrease in program participation by approximately 2.4 million individuals on average each month over the forthcoming decade. The analysis indicated that an additional 300,000 individuals will forfeit benefits in an average month as a result of a distinct provision.
