Millionaire‑Focused Tax Cuts Shake US Treasury Balance

Last year the U.S. House of Representatives passed the One Big Beautiful Bill Act (OBBBA), aiming to deliver over $5 trillion in tax cuts while offsetting the loss with more than $1 trillion in reductions to food stamps and Medicaid.

A Tax Break Tailored for the Ultra‑Wealthy

Although the bill does not explicitly target millionaires, it expands deductions for small‑business owners, effectively widening the tax shield for the affluent class and channeling benefits to high‑net‑worth investors.

Shrinking Treasury Revenues

The federal budget now projects an 8% drop in tax receipts, translating into an additional $300 billion deficit by 2025. Cuts to Health and Social Assistance programs strain fiscal sustainability over the long haul.

Market Reaction and Structural Risks

■Equities in sectors that stand to gain from tax relief (e.g., finance, real estate) posted short‑term gains.

■Bond yields rose, pushing U.S. Treasury prices lower and raising borrowing costs.

■Inflation expectations climbed as expanded fiscal outlays and dwindling government revenues add upward pressure on prices.

Political Narrative Versus Economic Reality

House Speaker Mike Johnson framed the cuts as a boon for “small‑business owners” and “job creators in every community,” a classic populist spin. Analysts warn that this rhetoric masks a widening income gap and a distortion of competitive markets.

Markets are likely to reprice growth expectations downward as the tax base narrows, prompting a higher risk premium demand. Central banks such as the BOJ and ECB may feel spill‑over effects, especially if capital flows shift toward Asia‑Pacific markets, amplifying volatility.