Republican Sen. Lisa Murkowski of Alaska recently expressed her deep internal conflict over the tax cut bill signed by President Trump on July 4. The legislation, known as the One Big Beautiful Bill Act, has stirred controversy due to its impact on different income groups. While some conservatives may support the bill as a way to reduce the “welfare state,” its implications have raised concerns even among Republicans.
The OBBBA consists of two main components. The first involves significant tax cuts and extensions that will benefit most taxpayers but also add trillions to the national debt. The second component includes benefit cuts aimed at offsetting the cost of the tax cuts, which disproportionately affect working-class Americans, making the overall impact of the bill punitive for them.
One of the most significant aspects of the OBBBA is the extension of the tax cuts implemented in 2017, which were set to expire at the end of the year. The bill makes the current individual income tax rates permanent, preventing a potential tax hike if the previous rates were reinstated. Additionally, the legislation introduces new tax breaks, such as the exemption of taxes on income from tips and overtime pay, albeit with certain restrictions.
While the tax provisions in the OBBBA generally benefit all taxpayers, the wealthy stand to gain the most. According to the Tax Policy Center, individuals with incomes above $1 million could save nearly $60,000 on average, while those earning below $30,000 would see minimal savings. However, the bill’s impact becomes more severe when considering cuts to Medicaid, Affordable Care Act subsidies, and food aid programs like SNAP, which could leave millions without crucial support.
The combination of tax changes and benefit cuts will disproportionately impact lower-income individuals, leading to an average annual loss of $600 for those in the lowest income quintile. Economists have labeled this policy change as regressive, as it places a heavier economic burden on those with lower incomes. The Tax Policy Center’s Howard Gleckman has highlighted the bill’s regressive, expensive, and complicated nature.
Despite some provisions aimed at working-class individuals, such as tax breaks for tip income and overtime pay, the bill has faced criticism for violating the principle of horizontal equity. This approach favors certain types of work over others, creating disparities and potential tax code distortions.
Public opinion on the OBBBA remains negative, with a majority of Americans disapproving of the legislation. The true test of its impact will come during the 2026 midterm elections, where voters will determine whether they feel better or worse off under Republican governance. As the bill faces scrutiny and backlash, the challenge of garnering public support for its provisions may prove more daunting than its passage.
