Republicans have had a tough time this summer selling their big, ugly megabill to their constituents. But if people actually knew the full extent to which the bill benefits rich people like us, they’d doubtless find the task tougher, or flat-out impossible.
Last month, the National Republican Congressional Committee urged House GOP members to use the August recess to sell their party’s recently passed One Big Beautiful Bill Act (OBBBA) to their constituents. However, it notably did not recommend members host town halls to get the word out, as they’re likely still suffering whiplash from the explosive encounters they faced in the spring with constituents, who were angry over DOGE shenanigans and planned cuts to essential services like Medicaid.
Most congressional Republicans have heeded their leaders’ advice, but a few members have put on brave faces and done the bare minimum for democracy by hosting town halls with their constituents. Suffice it is to say though, they haven’t exactly been pretty. Last week, when Representative Mike Flood (NE-01) tried to tout the tax savings that the new GOP bill delivers to Nebraska families, he was interrupted with chants of “Liar!” and “Tax the rich!” – which may be generous for a member of Congress who openly admitted to not reading a bill before voting to pass it. Even those that opt for “safer” options like telephone town halls aren’t spared: at a recent one, Representative Ryan Mackenzie (PA-07) was called out by one participant for failing to discuss how the tax law overwhelmingly benefits the rich.
Republicans believe in earnest that their megabill will become more popular with voters if only they learn more about it. (It’s currently polling in the gutter.) We couldn’t disagree more. Working people around the country understand how lopsided the GOP’s new bill really is in favor of rich people like us. But if they were to understand the full extent of how regressive it actually is, the scenes unfolding at town halls around the country these days would be a whole lot rockier.
For this week’s Closer Look, we’d like to do our part to get the full truth out about the GOP’s new megabill and just how much it helps the rich at the expense of the poor. We’ve already spoken about some of the better-known provisions of the bill and how they pull a reverse Robin Hood on the country. Now, we’d like to highlight five less-known provisions of the bill – the qualified small business stock exclusion; Opportunity Zones; corporate tax breaks for offshoring; a special tax break for oil and gas companies; and an extension of a rum tax rebate for Puerto Rico and the U.S. Virgin Islands – and explain how they disproportionately benefit the wealthy and corporations. Then, we’ll close by offering some thoughts on what Republicans and Democrats should do to get our country out of the mess created by the OBBBA.
Qualified small business stock exclusion
One less-known provision of the OBBBA expands a niche tax break for start-up founders and investors known as the qualified small business stock exclusion. Before the OBBBA, individuals who bought stock in companies when they had less than $50 million in assets did not owe capital gains taxes on the first $10 million they earned from selling their stock, as long as they held it for at least five years. Now, thanks to the OBBBA, initial investors in companies with less than $75 million in assets can qualify for the tax break. The tax break itself is also more generous. Start-up investors and founders can get a 100% capital gains discount on the first $15 million they earn from selling stock held for five years. They also are eligible to receive smaller capital gains tax discounts for selling stock held for at least three or four years.
Proponents of this provision argue that it’s needed to help incentivize investment in start-ups, which helps to create jobs and grow the economy. But the reality is that this exclusion overwhelmingly benefits the rich. A Treasury Department study found that, between 2012 and 2022, over 70% of the benefits of this provision flowed to people earning over $1 million. That’s entirely unsurprising. After all, an investment in a venture capital fund typically entails stroking a check for at least $250,000 for an interest in a high-risk investment.
Opportunity Zones
We spoke about Opportunity Zones a few weeks ago, when our Chair, Morris Pearl, mentioned them in our profile piece in The Washington Post. Opportunity Zones were created by the 2017 GOP Tax Cuts and Jobs Act (TCJA) to drive private investment to lower-income communities, i.e. Opportunity Zones (OZs), with the aim of spurring economic growth and job creation in these places.
In a nutshell, here’s how they worked under the TCJA. There are 8,764 census tracts across the US that are designated OZs. If investors chose to invest in OZs, they could avoid capital gains taxes in two ways. First, if investors chose to sell an asset and reinvest an amount equal to the profits they made from the sale in an OZ, they could delay payment of capital gains tax for up to seven years, and also have up to 15% of the deferred gain be fully tax-exempt. Secondly, if investors hold investments in OZs for at least ten years, their capital gains tax liability is wiped clean.
So how did the OZ program turn out? One thing is certain: investors certainly took advantage of it. Between 2018 and 2024, over $100 billion was invested in OZs. But unfortunately, most of that $100 billion found its way to communities that were relatively better-off and experiencing gentrification, with higher preexisting private investment and with higher income and levels of educational attainment among residents. Research has found that most of the OZ investments would have happened even without the tax incentive. As for its purported aims, OZs have fallen short. OZs did not experience higher job growth or business formation, nor did they increase the earnings or lower the poverty rate of residents.
The GOP drafters of the OBBBA had the opportunity to clean up the worst flaws of the OZ program – maybe it’s just us, but luxury condos and gold vaults shouldn’t be eligible for OZ investment – but they did nothing of the sort. Instead, they put the program on a path to further enrich the rich by “rewarding” them with a tax break for doing, well, nothing for the poor. Among other things, the OBBBA limits the eligibility criteria for OZs, enhances the deferred tax incentive for investors in rural areas, and makes the program permanent.
Special tax break for oil and gas companies
The OBBBA gives a special carve-out to the corporate alternative minimum tax (CAMT) for domestic oil and gas drillers. The CAMT was created by the Democrats’ 2022 Inflation Reduction Act. It ensures that all corporations with adjusted earnings over $1 billion pay a 15% minimum corporate tax rate. All corporations, that is, except large oil and gas ones now.
The provision will largely benefit companies headquartered in Oklahoma. So it will probably come as no surprise that Republican Senator James Lankford from Oklahoma was the driving force behind inserting the provision into the bill. It also shouldn’t come as a surprise that Senator Lankford received $545,000 in campaign contributions from the oil and gas industry between 2019 and 2024.
And if all this wasn’t bad enough, you should know that this is one of several goodies that oil and gas companies received from the OBBBA. We’ll save the rest for another time.
Extension of rum tax rebate for Puerto Rico and U.S. Virgin Islands
We bet this one wasn’t on your OBBBA bingo card!
Under current law, there is a $13.50 tax on spirits produced in or imported to the U.S. In the case of rum imported from Puerto Rico and the U.S. Virgin Islands, $13.25 of that tax is returned to those territories. $10.50 of that $13.25 is permanent, but Congress needs to periodically reauthorize the other $2.75. It did so in the OBBBA, but permanently, so now there is theoretically no need for additional reauthorization.
Lawmakers that pushed for the extension of the increased rum cover-over rate for Puerto Rico and the U.S. Virgin Islands argued that the territories depended on the additional revenue to make critical investments in education, infrastructure, and other public services and grow their economy. But research has found that, over the years, the revenue received from the rum tax rebate has increasingly flowed to big producers like Bacardí, which has also admitted to not creating more jobs in Puerto Rico after receiving a bigger slice of the rebate.
Conclusion
So there you have it: five more provisions that prove, beyond a shadow of a doubt, that Republicans’ new bill is only “big” and “beautiful” for the wealthy and corporations. It’s no wonder that the OBBBA will drive a wealth transfer from the poor to the rich greater than any piece of legislation in American history.
The silver lining in all this mess, though, is that the fight for tax justice is far from over. Here’s what we should call on Republicans and Democrats to do.
We’ll keep the bar fairly low for Republicans. They should be expected to show up at town halls, speak to their constituents, and tell the truth about their Big, Ugly Bill. This is Democracy 101. Rep. Mike Flood (NE-01) might obscure the facts about how lopsided his party’s bill is, but he was at least on the right track after his explosive town hall last week when he said to reporters, “If you feel strongly about what you’re doing in Congress, then stand in the town square, tell them why you voted that way.”
As for Democrats, the bar is a bit higher. Just because voters are unhappy with Republicans at the moment, doesn’t mean that they will automatically switch their allegiance to Democrats. Trump’s approval rating is in the gutter, but Democrats’ favorability rating is similarly at a historic low. What Democrats can and should do to turn their political fortunes around is to continue to get the truth out about how harmful Republicans’ new megabill is – but also, and more importantly, come together and offer a firm and coherent alternative tax vision to voters. If they’re looking for a place to start in coming up with that tax vision, they’re free to take up our “Cost of Living” Tax Cut Act.
As for us, the Patriotic Millionaires? Rest assured that we’ll continue to get the full truth out about how destructive the OBBBA really is and hold Republicans and Democrats accountable in meeting our demands. Even though the 2025 tax battle is over, that doesn’t mean the war is – and we plan to win.