Republican Tax Bill May Hurt the Lowest Earners and Help the Richest

As Representative Jason Smith commenced a marathon session this week to consider a sprawling and expensive Republican tax package, he took special care to emphasize his party’s commitment to “hard-working Americans.”

“Pro-growth tax policy will shift our economy toward one that serves them, not the wealthy and well-connected,” Mr. Smith, the Missouri lawmaker who leads the House’s top tax panel, proclaimed.

But the proposal he is trying to get to President Trump’s desk ultimately tells a more complicated story. The Republican tax plan may offer only modest gains to everyday workers, according to a wide range of tax experts, and some taxpayers may actually be left in worse financial shape if the bill becomes law.

The latest assessment arrived Friday from the Penn Wharton Budget Model, a nonpartisan scorekeeper closely watched on Capitol Hill. Economists found that many Americans who make less than $51,000 a year would see their after-tax income fall as a result of the Republican proposal beginning in 2026.

The Penn Wharton estimate sought to analyze the full scope of the Republican tax package, computing the effects of the tax cuts as well as the plan to pay for them by slashing federal spending on other programs, including Medicaid and food stamps. Combined, those policies could fall disproportionately on the poorest, including those near or below the poverty line, the economists found.

People making between about $51,000 and $17,000 could lose about $700 on average in after-tax income beginning in 2026, according to the analysis, when factoring in both wages and federal aid. That reduction would worsen over the next eight years. People reporting less than $17,000 in income would see a reduction closer to $1,000, on average, also increasing over time, a shortfall that underscores their reliance on federal benefits.