Vice President and 2024 Democratic presidential candidate Kamala Harris speaks during a campaign event in Atlanta, Georgia, on July 30, 2024.
Elijah Novelage | Elijah Novelage AFP | Getty Images
“Building the middle class will be an explicit goal of my presidency,” Vice President Kamala Harris said at a Politico event in Atlanta on Tuesday night.
“When our middle class is strong, America is strong,” de facto Democratic presidential candidate tell everyone Over 10,000 supporters.
“To keep the middle class strong, families need to escape the high cost of living so they have a chance, not just to get by, but to succeed,” Harris added.
Here’s how Harris might get there, based on the policies she championed during her first run for president in 2020 and as a senator.
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One of Harris’ signature proposals was senator – is called The Raising the Middle Class Act, or Livable Income for Today’s Families – would provide low- and moderate-income workers with tax credits of up to $3,000 per person per year (or $6,000 per couple) in addition to the benefits they already receive.
According to the agency, the size of the credit will be equivalent to a “significant tax relief” committee for a responsible federal budget.
The Harris campaign did not immediately respond to CNBC’s request for comment.
What the LIFT Act would look like today
Since the LIFT Act was first proposed in 2018, the cost of living has continued to soar, hitting working-class Americans particularly hard.
For these households, “real incomes have fallen or stayed the same due to inflation,” said Thomas Philipson, former chairman of the White House Council of Economic Advisers. told CNBC. This makes many office workers Lack of confidence in one’s financial situation ——Not very satisfied with President Biden’s performance economical handling.
At the same time, the rise of artificial intelligence has raised concerns about long-term job security.
Laura Veldkamp, a professor of finance and economics at Columbia University Business School, said in this case there is “a strong case” for reintroducing tax credits for people whose incomes fall below a certain threshold.
“A lot of people are asking the question: ‘Will artificial intelligence replace my job?’ Some people’s hard-won skills may become obsolete,” she said. “One way to solve this problem is to have more Social Security.”
But tax credits like LIFT are also extremely costly, according to the Tax Policy Center estimate From 2018 to 2019.
To help pay for additional financial support, Harris was Proposes repeal of provisions of the Tax Cuts and Jobs Act for taxpayers earning more than $100,000.
However, funding such tax credits may be difficult now due to growing concerns. federal budget deficit. Harris still needs to solve trillions Tax cuts that are about to expire promulgated by former president Donald Trump before 2025.
How the LIFT Act supports renters
Francesco D’Acunto, an associate professor of finance at Georgetown University, said the current version of the LIFT bill would likely benefit renters the most because many fall into the income categories targeted by the tax credits.
D’Acunto and other experts suggest the LIFT bill might even be a better aid Compare 5% rent cap proposal Biden unveiled the proposal on July 16.
Harris also supported the idea of a rent cap at a campaign rally in Atlanta: “We will take on corporate landlords and limit unfair rent increases.”
Yet economists have found that such policies inadvertently reduce the available supply of rental units. Rent control policies may further impact an already relatively scarce supply, according to A report released by the Federal Reserve in February.
The rental vacancy rate, or the percentage of all units available for rent, measures the tightness of the rental market; the higher the vacancy rate, the easier it is to find housing, the Fed said.
The central bank found that the overall vacancy rate fell to 5.6% in 2021, the lowest level since 1984. Supply has since rebounded and stabilized at 6.6% in April, according to the Federal Reserve’s census data.
Carl Wiedquist, an economist and philosophy professor at Georgetown University, said that while a rent cap might convince consumers that prices won’t rise significantly, it could have negative effects, such as landlords taking their properties off the rental market out.
Additionally, landlords who lose federal tax breaks can still raise rents, said Jacob Channel, senior economist at LendingTree.
D’Acunto said the advantage of the LIFT tax credit is that it doesn’t create the market distortions that rent caps can cause. “But now, from a tenant’s perspective, we’re actually helping them deal with the impact of rising rents very directly,” he said.
Widquist added: “We often provide tax breaks to all homeowners in the name of making it more affordable for people to be homeowners, but we don’t provide similar tax breaks to people who pay rent. These people are the ones who are trying to Become an owner.
Child tax credit a ‘top priority’ for Democrats
LIFT was first proposed several years ago in Congress on an interim Expand child tax credit Experts say this may be an even bigger priority during the Covid-19 pandemic.
The American Rescue Plan increases the child tax credit from $2,000 to $3,000 and provides an additional $600 for children under 6 in 2021, with families receiving up to half of the advance through: monthly payment. Harris describes Child tax credit changes As one of the “most important” and “most influential” parts of the legislation in the 2021 speech.
Child poverty rates plummet Historical low 5.2% A Columbia University analysis found that in 2021, this was largely due to expansion. Then by 2022, the ratio more than doubled That dropped to 12.4% after pandemic relief ended, according to the U.S. Census Bureau.
“The previous administration cut taxes for billionaires, and we passed child tax creditwhich cut child poverty in the United States in half,” Harris said at a political event in North Carolina before Biden dropped out of the race in late July.
Biden’s Fiscal Year 2025 Budget Aiming to revive the child tax credit increase for 2021, House lawmakers passed a measure in January bipartisan tax package, which includes an expansion of the child tax credit. The Senate is scheduled to hold a procedural vote on the bill on Thursday, which will force lawmakers to take a stance on the issue by November.
Garrett Watson, senior policy analyst and modeling manager at the Tax Foundation, said strengthening tax relief is “a top priority for Democrats.”
However, he said it’s unclear whether Harris will call for LIFT again or focus on the child tax credit, which has a different design but similar goals.
“It’s hard to say whether they will reconsider specific policy choices they made long ago,” said Brett House, an economics professor at Columbia Business School.
For now, “there are other cultural and political issues that will dominate.”
