U.S. Vice President Kamala Harris speaks during a campaign event at West Allis Central High School in West Allis, Wisconsin, on July 23, 2024.
Kevin Mohart | Reuters
“Building the middle class will be an explicit goal of my presidency,” Vice President Kamala Harris say in one Political event Tuesday’s speech in West Allis, Wisconsin – one of her first since becoming the race front-runner Replace President Joe Biden as Democratic presidential candidate.
As Harris’ campaign takes shape, addressing the wealth gap has become a top priority.
“When our middle class is strong, America is strong,” she said Tuesday.
The sentiment revisited ideas she had previously championed.
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One of Harris’ signature proposals was senator – is called Raising the Middle Class Act, or Livable Income for Today’s Families – Tax credits of up to $3,000 per person per year (or $6,000 per couple) will be provided to low- and moderate-income workers, on top of the benefits they already receive.
According to the agency, the size of the credit will be equivalent to “significant tax relief” committee for a responsible federal budget.
The Harris campaign did not immediately respond to CNBC’s request for comment.
How LIFT helps renters
Francesco D’Acunto, an associate professor of finance at Georgetown University, said that in today’s environment, the LIFT Act could provide financial benefits to renters 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 help for renters Compare 5% rent cap proposal Biden unveiled the proposal on July 16.
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.
Widerquist 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. Those are the people who are working hard to become homeowners.”
What the LIFT Act means today
Since the LIFT Act was first proposed in 2018, the cost of living has continued to soar, hitting working-class Americans particularly hard.
Thomas Philipson, former chairman of the White House Council of Economic Advisers, said that for these households, “real income has fallen or remained the same due to inflation.” This makes many office workers Lack of confidence in one’s financial situation ——Not very satisfied with 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.
Focus on the child tax credit
LIFT was first proposed several years ago as an interim measure in Congress 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.
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 last administration cut taxes for billionaires, and we passed child tax creditwhich cut child poverty in America in half,” Harris said at a political event in North Carolina last week before the president dropped out of the race.
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. However, the bill has been stuck in the Senate.
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.”
