Harris wants to give a $6,000 tax credit to parents of newborns. Here's what to know.
Vice President Kamala Harris is starting to unveil her economic plans, including a proposal to provide a $6,000 tax credit for parents of newborns as well as bringing back the pandemic-era expanded Child Tax Credit.
The more generous tax credits could lift millions of children out of poverty and aid middle-class families with the cost of raising kids, but it could come with a hefty price tag, according to the nonpartisan Tax Foundation, which pegs the 10-year cost at $1.6 trillion.
Even so, that could be less expensive than a competing proposal from Sen. JD Vance, the Republican vice-presidential nominee, who said he wants to boost the CTC to $5,000. That could cost somewhere between $2 trillion to $3 trillion over the next decade, the nonpartisan Committee for a Responsible Federal Budget told CBS MoneyWatch.
The current CTC stands at $2,000 per eligible child.
The dueling proposals to juice the Child Tax Credit come after lawmakers temporarily expanded the benefit during the pandemic, giving as much as $3,600 per child to eligible families. When that boost expired in 2022, millions of children were plunged back into poverty, prompting child advocates to urge lawmakers to consider another expansion.
Both proposals also come weeks after a bill that would have provided a modest expansion in the tax benefit failed in the Senate due to Republican opposition.
"Both campaigns are showing big, bold proposals to give low-income and middle-income families tax relief that will raise literally millions of children out of poverty should they be enacted," said Marisa Calderon, CEO of Prosperity Now, a nonprofit that advocates for economic equity, in a statement.
She added, "As always, the devil will be in the details of these plans."
Here's what we know so far about Harris's plan.
Which parents would get $6,000?
Harris is proposing that families with newborns would receive $6,000. The tax credit would be structured so that they would receive the tax credit in their child's first year.
For instance, a family that welcomed a child into their family in 2025 would receive the benefit for that tax year.
"That is a vital, vital year of critical development of a child," Harris said on Friday. "And the cost can really add up, especially for young parents who need to buy diapers and clothes and a car seat and so much else."
Would other parents get a bigger Child Tax Credit?
Yes, as Harris is proposing to bring back the expanded CTC for all other eligible families.
The expanded Child Tax Credit, effective in 2021, boosted the benefit to $3,600 for children under six years old and to $3,000 for children who were older than six.
While Harris didn't disclose eligibility guidelines for her proposal, both the current and expanded version of CTC include income thresholds. In the current tax year, the CTC phases out for single filers earning over $200,000 and married couples with more than $400,000 in income.
Meanwhile, Vance suggested that he'd like to see the CTC expanded without income limits. "You don't want a different policy for higher income families," he told "Face the Nation with Margaret Brennan" earlier this month. "You just want to have a pro-family Child Tax Credit."
Would Harris' plan have an economic impact?
The plan would have a minimal impact on GDP, according to the Tax Foundation.
However, both the Democratic and Republican plans to boost the CTC could have another economic impact by creating inflationary spending, according to Mark Malek, CIO at financial services firm Siebert.
"More money in the hands of consumers means increased demand which puts upward pressure on prices. We learned this during and right after the pandemic," Malek noted in an email. "This is not limited to Democratic proposals; the same applies to Republican proposals."