Document Type

Article

Publication Date

2025

Abstract

In this installment of Reflections With Reuven Avi-Yonah, Avi-Yonah explains what makes an effective U.S. tax regime and uses those attributes to evaluate the One Big Beautiful Bill Act. There is plenty to criticize about the One Big Beautiful Bill Act (OBBBA, P.L. 119-21), signed into law by President Trump on July 4. It increases the deficit by about $4 trillion when the interest costs from the additional borrowing are included, and by about $5.5 trillion if its provisions are made permanent in 2029, like the Tax Cuts and Jobs Act provisions were in 2025. It is distributionally skewed to the top. It makes permanent the worst provision of the TCJA: section 199A (the passthrough deduction). Some of the other extensions, like the expanded standard deduction and expensing, are defensible, but the new provisions, like no tax on tips, overtime, or Social Security benefits and the $40,000 state and local tax deduction, are not.

Comments

Reprinted with the permission of Tax Analysts

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