On May 22nd, the House narrowly passed the “Big, Beautiful Bill,” a piece of legislation that was endorsed by President Trump and Speaker Johnson, by one vote. The two Republicans who voted against it were Thomas Massie and Warren Davidson. Some Republicans even missed the vote, with one missing the vote because they fell asleep in the chambers. Ultimately, this bill will hurt the bottom 10% and give massive tax cuts to the top 10%. In addition, it will add $3.1 trillion to the debt as it stands and $5.1 trillion to the debt if the temporary provisions are extended without offsets in the next decade.
The first major aspect of this piece of legislation is the extension of the Tax Cuts and Jobs Act passed in 2017. This provision is crucial for Republicans because, without an extension of the tax cuts, marginal income tax rates will rise next year. Notably, the top marginal tax rate would increase from 37% for individuals earning over $640,000 to 39.6% for those earning over $550,000. Extending the TCJA’s changes to the top tax bracket alone would cost the U.S. an estimated $402 billion over the next 10 years. Interestingly, President Trump’s proposal to Speaker Mike Johnson to increase the top marginal tax rate to 39.6% for those who make over $2.5 million did not make it into the bill. Additionally, the TCJA’s cuts to the lower marginal tax rates—which would continue if the law were extended—do little to benefit most Americans. This is because more than 40% of American households pay $0 in federal income taxes due to the standard deduction, earned income tax credit, and child tax credit. Besides that, Americans already had personal exemptions of $4,050 per person in the household in 2016 which was replaced by a higher standard deduction by the TCJA. The standard deduction is currently $15,000, meaning Americans are not taxed on their first $15,000 of income. According to the Tax Policy Center, those making more than $450,000 would receive more than half of the benefits if the TCJA is extended. Additionally, according to Vox, if Congress lets the TCJA expire, the TCJA would give 83% of its benefits to the top 1% by 2027. Former Vice President Harris’ position during the campaign was that the TCJA’s tax rates should be extended for those making under $400,000 a year.
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Besides the extension of the TCJA, the second major aspect of the bill includes many new tax breaks. The child tax credit would temporarily increase from $2,000 to $2,500, before returning to $2,000 and being indexed for inflation after 2028. The Democratic party would likely agree with this policy, as Harris campaigned on increasing the child tax credit to a minimum of $3,000. Other tax changes include eliminating taxes on tips, overtime, and adding a $4,000 addition to the standard deduction for seniors. Because these tax provisions phase out for high-income earners, it seems likely that the Democratic Party would support them. Notably, all Senate Democrats voted in favor of the No Tax on Tips Act, which passed the Senate on May 20th. However, many Americans may be opposed to no tax on tips due to the possibility of tipped workers receiving less raises from the employer due to their employees receiving more in tips. In addition, all three tax policies are discriminating against those who do not receive tips, overtime, and are not seniors. After all, tips, overtime, and seniors’ income are all subject to the standard deduction already. Furthermore, it also raises the SALT deduction cap imposed by the TCJA from $10,000 to $40,000. The SALT (State And Local Tax) deduction is an itemized deduction for those who pay higher local taxes. In theory, the SALT deduction would save many low-income people from paying both federal and local taxes. However, since the standard deduction is higher now due to the TCJA, at $15,000, individuals would only take the SALT deduction if their total itemized deductions plus the SALT deduction is over $15,000. For instance, the effective state and local tax rate in the highest taxed state in the country, New York, is 15.9%. For those making $80,000 a year in New York, the amount of tax they would pay is approximately $12,720. So unless this person claimed $2,280 in additional itemized deductions, they would take the standard deduction instead. In fact, in New York, to even begin receiving the benefits of the SALT deduction if you only itemize with SALT, you would have to make approximately $95,000. Therefore, the SALT deduction only helps those who make over ~$100,000. The new SALT cap would begin to phase out at $500,000, meaning those making between $100,000-$500,000 would receive the biggest tax break due to this change. It should be noted that many Democratic and Republican congress members in blue states have opposed the $10,000 SALT cap because blue states tend to have higher state and local taxes.
Besides the tax changes in the bill, it would also make drastic changes to public assistance programs, most notably Medicaid and SNAP. The bill would institute work requirements for Medicaid recipients, require more checks to make sure those on Medicaid are still eligible, restrict states’ use of provider taxes to pay their share of Medicaid costs, and slash Medicaid funding for states that offer separate health insurance for unauthorized immigrants. The work requirement for Medicaid would require those who are on Medicaid to prove they are eligible via extra steps that are not needed. Additionally, work requirements for Medicaid ignores the fact that health problems affect whether people can work, and that only 8% of Medicaid covered adults (age 19-64) are not working due to retirement, inability to find work, or another reason. The Congressional Budget Office (CBO) has estimated that restricting states’ use of provider taxes to finance Medicaid would lead to reduced Medicaid coverage, as states would likely respond by cutting Medicaid spending. Additionally, it appears highly contradictory for the party that champions “states’ rights” to restrict states’ ability to impose taxes on “health care items or services or entities that provide or pay for health care items or services.” The same goes for the provision that reduces Medicaid expansion federal matching funds from 90% to 80% for states that provide their own state health program for unauthorized immigrants. According to the CBO, 10.3 million people would lose Medicaid, (about 1/7th of all Americans on Medicaid), and 7.6 million would be uninsured due to this bill. In addition to the changes made to Medicaid, the bill also makes significant changes to SNAP. The bill would tighten the existing work requirements by raising the age of able-bodied people to receive SNAP benefits from 54 to 64. This would cut $92 billion from SNAP and force 3.2 million Americans off the program.
In addition to the disastrous cuts already mentioned, it also cuts clean energy spending from the Inflation Reduction Act, signed into law by President Biden, spending that is fully paid for. The bill would end the electric vehicle tax credit on December 31, 2025, except for automakers that have sold fewer than 200,000 qualifying vehicles between 2010 and the end of this year. For those manufacturers, the credit would expire on December 31, 2026. It would also end the used EV, commercial EV, and residential EV charger tax credits by the end of this year. Additionally, it proposes an early phase out of the subsidies for wind, solar, energy storage, advanced nuclear, and geothermal energy. It also proposes repealing the Energy Efficiency Home Improvement Credit, which provides a tax credit for heat pumps, and the Residential Clean Energy Credit which offers homeowners 30% off the cost of solar panels and battery systems to store energy from solar panels.
While the cuts are bad, they may not be the worst of it. A provision in the bill would restrict the judicial branches’ ability to hold government officials in contempt when they violate court orders. To quote Erwin Chemerinsky, Professor of Law at UC Berkeley; “the bill is stunning in its scope. It would apply to all temporary restraining orders, preliminary injunctions, and even permanent injunctions ever issued. By its terms, it applies to court orders “issued prior to, on, or subsequent” to its adoption.” If you’ve been following the administration’s court battles so far, you’d know TRO’s and preliminary injunctions have been critical to slowing down some of the Trump admin’s worst initiatives. Just this past Friday a federal judge issued a TRO to block Trump from blocking Harvard’s ability to enroll international students. Chemerinsky states that “Without the ability to enforce judicial orders, they (federal courts) are rendered mere advisory opinions which parties are free to disregard.”
U.S. President Donald Trump shakes hands with Supreme Court Chief Justice
John Roberts during Trump’s inauguration in Washington, D.C., on Jan. 20.
Chip Somodevilla/AFP via Getty Images
There’s a lot more. Whether it’s banning states from regulating AI or fundamentally changing how student loans work, this bill lives up to the “big” part of its name. The bill has to pass the Senate, where Republicans have already been vocal about the need for adjustments. However, Republicans have a 53-47 majority, and only 51 votes are needed to pass this bill. With a deadline of July 4th, now is the time to call your senator, especially if you live in a red state. If the bill passes as is, millions will lose food stamps, millions more will lose healthcare coverage, and all of us will be one step closer to a full on dictatorship.