The tax breaks from the Tax Cuts and Jobs Act, enacted in 2017 during President Donald Trump’s first term, are set to expire in 2025. Currently, the Congress is in debate over how to manage trillions of dollars in expiring tax breaks, with lawmakers on both ends of the political spectrum arguing over who will benefit the most from their extension. Experts in economics and tax, however, indicate that the answer is not as simple as it seems.

Last Tuesday, House Republicans approved a budget plan that sets the stage for extending these tax breaks. If Congress doesn’t act, these cuts for individual taxpayers will end after 2025. The Republicans can extend these cuts with a simple majority vote in Congress using a legislative mechanism known as budget reconciliation.

Critics of the Republican plan, such as Rep. Richard Neal, D-Mass, argue that extending the Trump tax cuts, which are estimated to cost over $4 trillion, is a “reverse Robin Hood scam” that benefits the wealthy at the expense of the poor. On the other hand, Republicans argue that low- and middle-income households will benefit the most from the plan.

According to James Hines, a professor of law and economics at the University of Michigan, both sides have valid points. The Tax Cuts and Jobs Act did, in fact, lower taxes for most U.S. households. The Act benefitted Americans of varying income levels, which supports the Republicans’ claims. However, the largest tax cuts would be enjoyed by the highest-income families if the Act’s provisions were extended.

The debate over tax cuts is also influenced by potential spending cuts in programs like Medicaid and food stamps, which primarily benefit lower earners. Some argue that these spending cuts, coupled with the tax cuts, would leave low-income households worse off, even when considering economic growth.

The top 1% of households, those earning roughly $1 million or more per year, would receive a 3.2% increase in after-tax income in 2027 if the Trump law were extended, according to the Tax Policy Center. Meanwhile, middle-income households would receive a 1.3% income boost, or a $1,000 tax cut.

In the U.S., high earners generally shoulder more of the overall tax burden than low earners due to the country’s progressive income tax system. As such, a tax cut would naturally benefit the rich more in dollar terms. However, the tax cuts under the Tax Cuts and Jobs Act were proportionally more substantial for working families than for rich families.

In conclusion, the debate over the extension of the tax breaks from the Tax Cuts and Jobs Act is complex and multifaceted, with elements of truth on both sides. As such, it is important for individuals, especially those looking to invest, to understand the nuances of this issue and how it may impact them.