Tax Cut Extension with Medicaid and SNAP Spending Reductions

The Issue

Congress is considering proposals that would extend tax cuts originally passed in 2017 while substantially reducing federal support for programs like Medicaid and SNAP. 

Key Findings

Researchers from the Urban Institute estimated the effect of extending
the tax cuts and reducing federal spending on Medicaid and SNAP. Key
findings include: 

• Families with incomes below $10,000 would lose over $2,700 (nearly a 15 percent reduction in income) and all families with incomes below $30,000 would be worse off.
  
• Families making between $30,000 and $40,000 would see no change, and the families in the middle of the entire income distribution (with incomes from $50,000 to $75,000) would see a small gain of $680 (or 1.3%) in income.
• Families earning over $200,000 would see an average gain of over $13,000.
• The largest net gains would go those with incomes over $1 million (over $80,000 on average).

Conclusion

Researchers conclude that the net benefits of these combined policies would be concentrated among families with higher incomes, while the lowest-income families would suffer significant losses in income. 

About the Author/Grantee

The nonprofit Urban Institute is dedicated to elevating the debate on social and economic policy. For nearly five decades, Urban scholars have conducted research and offered evidence-based solutions that improve lives and strengthen communities across a rapidly urbanizing world. Their objective research helps expand opportunities for all, reduce hardship among the most vulnerable, and strengthen the effectiveness of the public sector. Visit the Urban Institute’s Health Policy Center for more information specific to its staff and its recent research.