A recent analysis by the Congressional Budget Office (CBO) reveals that Republican tax and spending reduction proposals disproportionately benefit the wealthy at the expense of low-income Americans.
This report highlights how individuals with low earnings are expected to see a decrease in household resources as a result of what has been called President Trump’s “big, beautiful bill.”
According to CBO estimates, the lowest earners are likely to experience a loss amounting to at least 10% of their income, while the highest earners see increased profits.
Projected losses for low-income individuals could reach 2% by 2037 and 4% in 2029, 2031, and 2033. In contrast, the wealthiest are expected to see profit increases of 4% in 2037, 3% in 2029, 1% in 2031, and 2% in 2033.
The primary reason for these losses among low-income earners stems from cuts to federal healthcare and food assistance programs. The CBO suggests that around 8.6 million people may lose health insurance coverage and about 3 million could be cut from food stamp assistance.
On the flip side, the gains for high-income individuals primarily result from tax reductions.
The CBO’s findings align with those from the Joint Committee on Taxation (JCT), which is the official body responsible for assessing tax proposals in Congress.
The JCT has calculated that, of the $568.7 billion in tax cuts projected for 2027, over two-thirds—approximately $384.6 billion—will go to the top tier of earners.
The median household income in the United States hovers around $80,000 annually. Households in the middle income range are set to receive only a fraction of that, with tax cuts totaling $49.6 billion, which constitutes around 8.8% of the overall cuts in 2027, compared to the substantial 68% allocated to the wealthiest.
People earning between $200,000 and $500,000 are expected to benefit significantly, with a projected tax cut of $169.5 billion in 2027, accounting for about 30% of the total tax cuts that year.
Moreover, those in the 95th to 99th income percentiles could see tax savings totaling $117.2 billion, representing more than 20% of the overall tax cuts for that year.
The CBO has yet to provide a full cost analysis of the legislation, but it has highlighted some major components.
Budget cuts include $238 billion from the Agriculture Committee, which oversees food stamps, and $987 billion from the Energy and Commerce Committee, responsible for most of the federal healthcare system. The Education Workforce Committee is looking at a cut of around $350 billion.
Additionally, the Ways and Means Committee—governing tax matters—projects contributing approximately $3.8 trillion to the tax cut deficit.
In summarizing these interactions between budget cuts and tax reductions, the CBO warns that the overall deficit could be significantly larger than the $2.3 trillion initially estimated based on individual line items.
