On 4 July 2025, Donald Trump ceremoniously signed a bill called the One Big Beautiful Bill Act, hailed as a major victory of his second term. Under the festive salutes in honour of Independence Day, America received a document that, according to its critics, will benefit the rich, increase social inequality and undermine the country’s economy for decades to come.
The essence of the law is an indefinite extension of tax breaks first introduced by Trump back in 2018. Instead of the planned 2025 tax hikes, rates will remain understated: the top income tax rate remains at 37%, the corporate tax rate stays at 21%, and deductions for small businesses even increase slightly. The non-taxable minimum for inheritance tax is also significantly increased. All of this will keep income levels high for the wealthiest Americans and corporations. On top of that, temporary deductions for tips, overtime and pension payments are introduced, designed to keep workers loyal to Trump in the coming years.
At the same time, the law sharply increases budget expenditures to combat illegal migration – more than $90 billion has been allocated for the construction of deportation centres and a wall on the border with Mexico. Private universities are also under attack – the tax on their endowments is raised from 1.4% to 8%, especially affecting Harvard, Stanford, Yale and other leading universities. Additionally, the law repeals a tax on the purchase of short-barreled firearms that had been in place since 1934, a major victory for supporters of free gun ownership.
Nevertheless, the most vulnerable will pay for all of this. The law calls for nearly $1.5 trillion in cuts to Medicaid, food assistance and other social programmes. Millions of poor Americans could lose their health insurance. Rural America, where Medicaid pays for nearly half of all births and elder care, will be particularly affected.
Economists estimate that by 2034, the incomes of the poorest 20% of Americans will decrease by almost $700 a year, while the richest 1% will increase their incomes by $30,000. Against this background, the federal debt will grow by another $3-5 trillion. It already stands at 98% of GDP, and Moody’s has downgraded the US credit rating, citing the legislation.
The One Big Beautiful Bill Act is a political-economic experiment, the consequences of which will stretch for decades. The law radically redistributes resources in favour of the wealthiest Americans while cutting support for millions in need. The One Big Beautiful Bill Act also leads to a record national debt, an unbalanced budget, and growing social divisions.
