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'There Will Be Pain': How Trump Tax Giveaways to the Rich Hurt Small Businesses and Working People
"Congress has a choice—they can either extend a failed policy or create tax reform that actually works for Main Street and communities."
Feb 13, 2025
As the Trump administration and congressional Republicans pursue trillions of dollars in new tax giveaways for wealthy individuals and corporations, economists and pollsters this week are warning about how devastating the GOP's plan would be for small businesses and working families.
There Will Be Pain is the matter-of-fact title of a Thursday report from Josh Bivens, chief economist at the Economic Policy Institute (EPI). It details how extending the expiring provisions from the tax law that Republican lawmakers passed and Trump signed in 2017 "will have painful trade-offs for the U.S. economy and most Americans."
"The U.S. 'fiscal gap'—how much taxes need to be raised or spending cut to keep public debt stable as a share of gross domestic product—was entirely created by the Republican tax cuts of 2001, 2003, and 2017," Bivens wrote. "The 'tax gap'—the amount of taxes owed but not paid each year—is currently larger than the overall fiscal gap. It is driven by the richest U.S. households and businesses cheating the law and underpaying taxes."
Extending the Tax Cuts and Jobs Act (TCJA) provisions, currently set to expire at the end of this year, "would increase the fiscal gap by nearly 50%, from 2.1% to 3.3%," Bivens explained. "No matter how these tax cuts are financed, the result will hurt most working families, especially low-income households."
"Cuts to key social insurance and income support programs like Supplemental Nutrition Assistance Program (SNAP, commonly called food stamps) or Medicaid would do substantial damage to the nation's future workforce by depriving millions of children today of key health and developmental supports," he warned.
"Further, cuts of this size, if phased in quickly, would at minimum require the Federal Reserve to aggressively cut interest rates to avoid a recession," Bivens continued, "and could quite easily overwhelm any attempt by the Fed to buffer the economy from their effect, leading to recession and job losses."
The Republican playbook offers normal people crumbs and gives the cake to the rich. Extending Trump's 2017 tax cuts will give the bottom 60% $1.10 per day - but will give the top 1% $165 per day. Paying for this generosity to the top will cost working families dearly.
— Economic Policy Institute ( @epi.org) February 13, 2025 at 12:21 PM
Bivens argued that "expanding public investment and raising federal revenue via taxes that mostly come from high-income households is the most optimal way to close fiscal gap, boost economic productivity, and produce a fairer economy."
"If TCJA expansions for the rich are inevitable, this leaves three options: running deficits, increasing regressive taxes (in the form of tariffs, for example), or spending cuts," he added. "While none of these options is ideal, running deficits has the potential to be less harmful for American families, whereas regressive taxation and spending cuts will categorically cause the most harm."
The think tank published Bivens' report as a national coalition, Small Business for America's Future, released its findings from a survey of 863 small business owners' sentiments on the tax code, conducted from mid-December to late January.
The survey shows that just 3% of small business owners hired more workers as a result of the TCJA, 6% increased investments or employee wages, and 9% were able to pay down debts. Meanwhile, 43% reported no positive impact from the 2017 law.
The coalition found that small business owners are critical of the U.S. tax code in general and the TCJA specifically. Of those surveyed, 91% of said the tax code "favors large corporations over small businesses" and 76% report that wealthy individuals and big companies benefited most from the 2017 law, which critics have long called the "GOP Tax Scam."
The TCJA's small business pass-through deduction lets owners exclude up to 20% of their qualified business income from federal income tax. However, critics have called it complex and the survey shows that 39% of owners weren't sure if they claim the benefit.
The survey also highlights solutions that are popular with owners, such as exempting the first $25,000 of profit from federal income tax, creating a simplified standard deduction, making the tax code less complicated, and modernizing the Internal Revenue Service. Additionally, 61% of respondents support raising the corporate tax rate to pay for new small business tax benefits.
"By slashing the corporate tax rate permanently from 35% to 21%, while offering most small business owners only a temporary and complex 20% tax deduction, the TCJA created a two-tier tax system that overwhelmingly favored large corporations," said Walt Rowen, co-chair of Small Business for America's Future and president of the Susquehanna Glass Company in Pennsylvania.
"This isn't just hurting business owners—it's failing workers, families and local economies in every community across the country," Rowen added. "Now, Congress has a choice—they can either extend a failed policy or create tax reform that actually works for Main Street and communities."
The GOP controls the White House and both chambers of Congress, but those surveyed by the coalition were divided in terms of political parties: 23% said they didn't know or preferred not to say while 29% identified as Republicans, 25% as Democrats, and 19% as Independents. More than three-quarters were age 55 or older, 56% were white, and just over half were men. A quarter of owners listed themselves as the only employee, and nearly half had just 1-10 workers.
"Small businesses create jobs, drive innovation, and provide essential services in every community across America. But this law has done nothing to help them fulfill their potential," said Anne Zimmerman, a coalition co-chair and certified public accountant in Ohio. "When nearly 40% of small business owners can't even determine if they received the law's main small business tax deduction, while large corporations got an immediate and permanent tax cut, something is fundamentally wrong with our approach."
The small business survey and EPI's report followed polling released Tuesday by Data for Progress, Groundwork Collaborative, and the Student Borrower Protection Center that shows a majority of Americans believe not only that the rich pay too little in taxes but also that lawmakers shouldn't slash popular programs to give them more tax cuts.
"Americans might not always see eye to eye, but one thing's clear: Nearly every voter—across party lines—wants to protect Medicare, Medicaid, Social Security, and SNAP," said Groundwork Collaborative. "Meanwhile, the GOP is pushing to gut them for even more tax breaks for the wealthy."
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GOP Proposes $4.5 Trillion Tax Giveaway to the Rich While 'Ransacking' Food Stamps and Medicaid
"House Republican leadership put a giant bullseye on Medicaid, with the intent to strip Americans of their healthcare benefits to pay for tax cuts for billionaires and big corporations."
Feb 12, 2025
House Republicans unveiled a draft budget resolution on Wednesday that calls for $4.5 trillion in tax breaks that would disproportionately benefit the wealthy while proposing $2 trillion in cuts to Medicaid, federal nutrition assistance, and other programs.
Lawmakers are set to mark up the House GOP's budget blueprint on Thursday as Republicans look to craft a sprawling reconciliation bill that can pass both chambers of Congress with a simple-majority vote. Last week, Senate Republicans released their own budget resolution that proposed significant cuts to Medicaid, the Supplemental Nutrition Assistance Program (SNAP), and other spending that benefits working-class families.
"Instead of tackling rising prices and delivering relief for American families, House Republicans are charging ahead with trillions of dollars in deeply unpopular tax breaks for billionaires like Donald Trump and Elon Musk," Alex Jacquez, chief of policy and advocacy at the Groundwork Collaborative, said Wednesday in response to the House GOP resolution.
"And, they're paying for their billionaire handouts by ransacking healthcare, food assistance, and other vital programs that American workers and families rely on," Jacquez added.
The new resolution released by the Republican-controlled House Budget Committee specifically calls on the chamber's energy and commerce panel to "submit changes in laws within its jurisdiction to reduce the deficit by not less than" $880 billion over the next decade. The House Energy and Commerce Committee has jurisdiction over Medicaid.
The measure also instructs the House Committee on Agriculture, which has jurisdiction over SNAP, to cut no less than $230 billion in spending between fiscal years 2025 and 2034.
"They wanna do a giant tax cut that disproportionately helps the rich while taking away people's health insurance and food while still adding trillions to the debt," Bobby Kogan, a former Senate Budget Committee staffer who is now senior director of federal budget policy at the Center for American Progress, wrote in response to the resolution.
Overall, the House GOP's budget resolution calls for $2 trillion in cuts to "mandatory spending" over the next decade, taking aim at a category that includes Medicaid, Medicare, Social Security, and SNAP. While Social Security benefits cannot be cut through the reconciliation process, Supplemental Security Income (SSI) can.
Congressional Republicans have outlined a number of ways they could slash Medicaid and SNAP, including punitive new work requirements that analysts say would strip benefits from tens of millions of low-income people.
But Families USA executive director Anthony Wright said Wednesday that "we don't need to know the mechanisms of how Medicaid would be cut to know the impact would be catastrophic: The sheer size of the proposed cuts means millions of Americans losing coverage, hospitals and clinics plunged into budget shortfalls, and healthcare services we all depend on being eliminated."
"This budget resolution is a five-alarm fire alert for our healthcare," said Wright. "House Republican leadership put a giant bullseye on Medicaid, with the intent to strip Americans of their healthcare benefits to pay for tax cuts for billionaires and big corporations."
Kobie Christian, a spokesperson for the progressive coalition Unrig Our Economy, issued a similarly scathing statement on Wednesday, arguing that House Republicans "showed us that what they value is more tax breaks for greedy billionaires and giant corporations with everyday people paying the price."
"At a time when everyday Americans face increasingly higher prices, Speaker Johnson and his stooges want to write billionaires a check and force working-class people to foot the bill for their outrageous tax breaks for corporations and the ultra-wealthy," said Christian. "Everyday Americans will not stand for these games—it's time for Republicans in Congress to end their campaign that puts the ultra-wealthy first on the backs of the rest of us."
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'Extremely Dangerous Time': Sanders Warns of Oligarchs' War on Working Class
"Does anyone really think that the oligarchs give a damn about ordinary Americans?" the senator asked. "Trust me, they don't."
Feb 11, 2025
As U.S. President Donald Trump and billionaire Elon Musk on Tuesday continued their effort to gut the federal government, Sen. Bernie Sanders warned that "the oligarchs, with their unlimited amounts of money, are waging a war on the working class of our country, and it is a war that they are intent on winning."
A week after delivering a speech that sounded the alarm about "America's dangerous movement toward oligarchy, authoritarianism, and kleptocracy," Sanders (I-Vt.) took the Senate floor again to target the world's three richest people—Musk, Jeff Bezos, and Mark Zuckerberg—and the politicians who serve them.
"We are living in an extremely dangerous time," the seantor said Tuesday. "Future generations will look back at this moment—what we do right now—and remember whether we had the courage to defend our democracy against the growing threats of oligarchy and authoritarianism."
As chair of Trump's so-called Department of Government Efficiency (DOGE), Musk's targets have included the U.S. Agency for International Development, Consumer Financial Protection Bureau, Department of Education, National Oceanic and Atmospheric Administration, and a critical U.S. Treasury Department payment system. Reporting—and remarks from the billionaire—suggest that the agencies responsible for Medicaid, Medicare, and Social Security are next.
"As we speak, right now, Elon Musk, the wealthiest man on the planet, is attempting to dismantle major agencies of the federal government which are designed to protect the needs of working families and the disadvantaged," said Sanders. "These agencies were created by the U.S. Congress and it is Congress' responsibility to maintain them, to reform them, or to end them. It is not Mr. Musk’s responsibility. What Mr. Musk is doing is patently illegal and unconstitutional—and must be ended."
Sanders also detailed Trump and his allies' attacks on the federal judiciary, which has delivered a series of blows to the Republican president's agenda since he took office last month.
"Mr. Trump and his friends are not just trying to undermine two of the three pillars of our constitutional government—Congress and the courts—they are also going after the media, in a way that we have never seen in the modern history of this country," the senator said. While recognizing that the media "makes mistakes every day," he added that "I do hope that every member of Congress understands that you cannot have a functioning democracy, you cannot have a free flow of information, you cannot have the pursuit of truth, without an independent press."
The senator also how the top three billionaires impact what information reaches people by buying news outlets and social media platforms—as Musk did with Twitter, which he rebranded X, and Bezos did with The Washington Post and Twitch. Zuckerberg, meanwhile, has made his money through Meta, the parent company of Facebook and Instagram.
"They will use the enormous media operations they own to deflect attention away from the impact of their policies while they 'entertain us to death,'" Sanders warns. "They and their fellow oligarchs will continue within our corrupt campaign finance system to spend huge amounts of money to buy politicians in both major political parties."
"Does anyone really think that the oligarchs give a damn about ordinary Americans?" he asked. "Trust me, they don't."
Sanders warned that "if we do not stop them, they will soon be going after the healthcare, nutrition, housing, and educational programs that protect the most vulnerable people in our country—all so that they can raise they money they need to provide huge tax breaks for themselves and for others billionaires. As modern-day kings who believe they have the absolute right to rule, they will sacrifice, without hesitation, the well-being of working people in order to protect their power and their privileges."
However, he also stressed that "the worst fear of the ruling class of our country is that the American people—whether they are Black or white or Latino, whether they are urban or rural, whether they are young or old, gay or straight, whatever—the fear of the ruling class is that the American people come together to demand a government that represents all of us, not just the people on top."
"The oligarch's nightmare is that we will not allow ourselves to be divided up by race, religion, sexual orientation, or country of origin and will come together and have the courage to take them on," he declared. "If we stand together, we're gonna win this fight, and not only will we save American democracy, we're gonna create the kind of nation that I think most of us know we should become."
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