Donald Trump doesn’t just love billionaires, he loves multimillionaires too
The article argues that Donald Trump’s One Big Beautiful Bill Act gives substantial tax advantages to wealthy owners of “pass-through” businesses, despite Republican claims that the measures chiefly support small firms and local job creators. It says the policy matters because it reduces government revenue while benefits are concentrated among high-income individuals, alongside cuts to programmes such as Medicaid and food assistance.
Pass-through businesses generally do not pay corporation tax directly; their profits are taxed through their owners’ individual returns. The article says the permanent 20% deduction for pass-through income is projected to cost $820bn over ten years, while 57% of $1.3tn in such income in 2022 went to 890,000 people in the top 1%; one study found $54bn, or 35% of deductions after the 2017 tax changes, went to taxpayers earning at least $1m.
- Pass-through tax breaks largely benefit wealthy business owners.
- The deduction is projected to cost $820bn over a decade.
- Supporters describe beneficiaries as small-business job creators.
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Pass-through businesses include partnerships, sole traders and many privately owned companies whose profits are taxed as their owners’ personal income rather than through corporation tax. They range from small local firms to very large businesses owned by wealthy investors.
Donald Trump and congressional Republicans have promoted tax breaks for these businesses as support for entrepreneurs, investment and jobs. Critics say the largest gains often go to people with very high incomes because they own a large share of pass-through business profits.
The debate is part of a wider argument over US tax policy and public spending. Tax cuts can reduce the money available to the federal government, while changes to programmes such as Medicaid and food assistance affect households that rely on them.
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The strongest fair case each way — we don't pick a winner.
The case for
Supporters argue that a permanent pass-through deduction recognises that many small and medium-sized firms are taxed through their owners’ personal returns rather than under corporation tax. They contend that lowering this burden leaves businesses with more capital to invest, hire, withstand downturns and compete with larger corporations, while predictable long-term rules make planning easier. They also argue that high-income recipients are not necessarily passive beneficiaries: many own firms whose investment and employment can support local economies.
The case against
Critics argue that the deduction is poorly targeted because a large share of pass-through income and tax benefits flows to very wealthy owners, not to the small local firms invoked in its defence. In their view, permanently forgoing substantial revenue for a benefit concentrated at the top is difficult to justify when public programmes such as Medicaid and food assistance face reductions. They favour tax policy that directs support more clearly towards smaller businesses and households with greater need, while preserving funds for public services.