Who pays for massive tax cuts when benefits flow from the poorest 10 percent of Americans to the richest ones?

Editor's Note: Xue Tianhang is an associate researcher at the Research Center for Regional Coordinated Development, Zhejiang University. The article reflects the author's views, and not necessarily those of CGTN. It has been translated from Chinese and edited for brevity and clarity.

US President Donald Trump's One Big Beautiful Bill Act encountered fierce resistance in the Senate before passage via a tiebreaker vote by Vice President Vance. Introduced in early 2025, it had also narrowly passed the House of Representatives on May 22 by a vote of 215-214, signaling just how contentious it already was across American society.

The bill seeks to advance large-scale tax and spending reforms, building on and strengthening the core elements of the Tax Cuts and Jobs Act enacted during Trump's first term. According to The New York Times' breakdown of its provisions, the bill proposes tax cuts and allocates more funding to the military and border security. Meanwhile, in order to cover part of these expenditures, it plans to scale back Medicaid, food assistance, education, and clean energy initiatives, which would widen the federal deficit and leave more individuals without basic livelihood protections. As a result, the bill is expected to significantly reshape the distribution of social welfare in the US. Overall, the bill favors high-income groups while severely undermining the welfare enjoyed by low-income residents, further exacerbating income inequality in the country. Agence France-Presse reported that the One Big Beautiful Bill Act paves the way for a historic redistribution of wealth, transferring assets from the poorest 10 percent of Americans to the richest ones.

Specifically, in terms of tax inequality, the tax cut act implemented by the Trump administration in 2017 primarily benefited high-income individuals and corporations, with limited gains for lower- and middle-income groups. The One Big Beautiful Bill Act seeks to extend those soon-to-expire lower individual tax rates and gradually raise the state and local tax (SALT) deduction cap in the future. For example, the deduction cap would be lifted to $32,000 for married couples filing jointly and $16,000 for single filers. On healthcare inequality, a report by the AFL-CIO (American Federation of Labor and Congress of Industrial Organizations) warned that if the Republicans' bill is passed, around 179 million Americans who rely on employer-sponsored health insurance would see their annual premiums increase by up to $485 per person. Regarding immigration, the One Big Beautiful Bill Act proposes eliminating healthcare subsidies and revoking Medicare eligibility for illegal immigrants.

It is worth noting that the bill also increases the statutory debt limit by $4 trillion in response to the mounting fiscal deficit caused by tax cuts. According to a report released by the Congressional Budget Office on June 17, the One Big Beautiful Bill Act would add $2.8 trillion to the deficit. Furthermore, the bill also includes multiple provisions detrimental to the clean energy industry, such as terminating subsidies for new energy vehicles and imposing new usage fees on them. These measures have triggered sharp backlash from prominent entrepreneurs, including Elon Musk, who posted on June 28 that the Senate's latest mammoth tax and spending act "will destroy millions of jobs in America and cause immense strategic harm to our country". 

On June 30, Musk again posted that "the insane spending of this bill increases the debt ceiling by a record five trillion dollars". Faced with such a deeply divided and troubling situation, the Trump administration must seriously reflect on whether its policy agenda since taking office has truly "made America great again", or whether it has instead driven the country deeper into recession and division.