The White House touted the Republican-backed tax bill on Friday as they offered “permanent tax cuts and greater salaries.” However, experts say the legislation will disproportionately make the highest income earners, while providing greater benefits to Americans.
If the bill is passed, a new analysis by the Public Policy Think Tank’s New Analysis (CBPP) shows that annual revenues of more than $1 million will increase its after-tax earnings by 4.3%. The CBPP found that the lowest 20% of Americans would receive the smallest boost—their after-tax income would increase by 0.6%, an average of $90 a year.
Other analyses have drawn similar conclusions. The Center for Tax Policy, a joint venture between City College and Brookings Agency, predicts that the lowest 20% of Americans will increase after-tax income by 0.6% under the House Tax Act, while the top 20% tax rate will increase by 3.7%.
The fate of the Republican tax bill is unclear after five Republican members of the House Budget Committee on Friday Vote against moving forward The measure, known as "a big, beautiful, Bill," said the legislation is not enough to cut federal spending.
Such forecasts do not include the impact of cuts on federal programs such as Medicaid and food stamps that support many low- and middle-income households. Under the Republican bill, these services may face steep cuts and may encounter Millions of Medicaid Support health care programs by adding job requirements and cutting federal funding provided to states.
The cuts could make many low-income households worse, according to another analysis released Friday by Penn Wharton's budget model, a research group at the University of Pennsylvania.
The nonpartisan group found that the lowest 20% of households earn about $17,000 in annual income, and their after-tax income fell by $1,035 in 2026, which included lower government benefits. Penn Wharton said the after-tax increase of at least $4.3 million per year is about $389,000.
The White House raised questions about CBPP and Penn Wharton analysis.
"Once again, experts are wrong, just like the impact of Trump's tariffs, which have generated trillions of dollars in investment, record job growth and no inflation," White House spokesman Harrison Fields said in an email to CBS MoneyWatch.
He added: "Those experts should be embarrassed to share their expertise given the eggs still on their faces. Maganomics goes beyond traditional wisdom, with the president alone, and the big and beautiful Bill will continue to prove the haters wrong."
The White House noted that the Joint Tax Committee's analysis estimates that the average tax bill in 2027 will fall by 11.1%. The nonpartisan panel that assesses the impact of legislation on Congress found that the biggest tax reduction would be for those who earn $15,000 to $30,000, a 21.1% drop, while those who earn more than $1 million would fall by 8.6%.
Experts, including Yale Yale Budget Laboratory, say low-income families may be hit by a bigger financial impact from tariffs as they spend more money on food and clothing. Some analysts say this can effectively eliminate the benefits of tax cuts.
The CBPP found that if inflation increases, tariffs and tax cuts increase, the lowest 20% of households in the U.S. will lose $100 a year, mainly due to higher fees for consumer goods imported from other countries. Since tariffs are taxes on import taxes paid by U.S. businesses, they usually transfer the cost of these responsibilities to consumers by raising prices.
"If we only increase the impact of tariffs in the Trump administration, the program will still strengthen the shares of the rich while making the lowest income worse because their tax cuts are small," said Brendan Duke, senior director of federal fiscal policy at CBPP.
Think tank estimates that figuring out the impact of tariffs, the top 1% of households will still see their after-tax income increase by 3%, or nearly $45,000. The analysis does not include the impact of cuts on services such as Medicaid or food stamps.
Walmart said Thursday it plans Prices increased this month To offset the cost of new tariffs proposed by the Trump administration.
In addition to calling for deeper cuts to federal spending, Republican lawmakers have blocked tax bills Job requirements For some Medicaid recipients, under the current bill, it will not begin until 2029.
Other Republicans want a larger deduction to state and local taxes, called salt, that can be applied to people’s federal tax returns. The bill increases the cap on deductions from $10,000 to $30,000.
But the basic overview of the bill's tax cuts is not the focus of the debate for Republicans, who are trying to expand Mr. Trump's 2017 tax cuts and jobs bill. The bill will also be added Other layoffssuch as eliminating overtime pay and tips for workers, while also providing a more generous standard deduction.