U.S. Vice President Kamala Harris speaks at an occasion with U.S. President Joe Biden (not pictured) in Prince George’s County, Maryland, U.S., August 15, 2024.
Elizabeth Frantz | Reuters
Vice President Kamala Harris on Friday unveiled an financial plan, together with an expanded baby tax credit score price as much as $6,000 in complete tax aid for households with new child youngsters.
The Democratic presidential nominee’s plan goals to revive the greater baby tax credit score enacted by way of the American Rescue Plan in 2021, which supplied a most credit score of as much as $3,600 per baby, in line with a truth sheet from the marketing campaign.
The 2021 credit score was as much as $3,000 or $3,600, relying on the kid’s age and household’s earnings. Harris’ proposed tax break would improve for middle- to lower-income households for one yr after a toddler is born.
“We will provide $6,000 in tax relief to families during the first year of a child’s life,” stated Harris throughout a coverage speech in Raleigh, North Carolina.
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The plan comes lower than one week after Sen. JD Vance of Ohio, former President Donald Trump‘s GOP working mate, floated a $5,000 baby tax credit score.
A Trump marketing campaign official advised CNBC: “Trump will consider a significant expansion of the child tax credit that applies to American families.”
Whereas Harris has adopted President Joe Biden’s footsteps together with her proposed baby tax credit score growth, the $2,400 bonus for newborns is “different and somewhat surprising,” stated Kyle Pomerleau, senior fellow and federal tax knowledgeable with the American Enterprise Institute. “That, to me, sounds very much like a response to JD Vance.”
The Harris marketing campaign didn’t instantly reply to CNBC’s request for remark.
‘Bipartisan momentum’ for the kid tax credit score
Senate Republicans earlier in August blocked an expanded baby tax credit score that handed within the Home with broad assist. Nonetheless, Republican lawmakers are anticipated to revisit the measure after the election.
“There is bipartisan momentum behind expanding the [child tax credit],” stated Andrew Lautz, affiliate director for the Bipartisan Coverage Middle’s financial coverage program.
There may be bipartisan momentum behind increasing the [child tax credit].
Andrew Lautz
Affiliate director for the Bipartisan Coverage Middle’s financial coverage program
The dimensions of the growth and future credit score design will hinge on which social gathering controls the White Home and Congress. However the Home-passed invoice and Senate negotiations may very well be a place to begin, Lautz stated.
Future baby tax credit score expiration
With out motion from Congress, the utmost baby tax credit score will drop from $2,000 to $1,000 as soon as Trump’s 2017 tax cuts expire after 2025.
The American Rescue Plan quickly elevated the utmost baby tax credit score from $2,000 to both $3,000 or $3,600, relying on the kid’s age. Households acquired as much as half by way of month-to-month funds for 2021.
The kid poverty fee fell to a historic low of 5.2% in 2021, largely as a result of credit score’s growth, in line with a Columbia College evaluation.
If there is a future baby tax credit score growth, Pomerleau would not anticipate it to be as massive because the tax break that Harris or Vance have proposed.
Amid the federal price range deficit, lawmakers are already wrestling with trillions in expiring tax cuts which are “prohibitively expensive,” he stated.
Increasing the kid tax credit score to $3,000 or $3,600 might price an estimated $1.1 trillion over a decade, in line with the Committee for a Accountable Federal Finances. In the meantime, the growth to $6,000 for newborns might price $100 billion.
The Harris marketing campaign’s financial plan truth sheet stated she would fulfill her “commitment to fiscal responsibility,” together with requires greater taxes on rich Individuals and enormous companies.
