In the context of the current presidential race in the United States, one issue that has gained particular significance is the potential expansion of the Child Tax Credit . Both Vice President Kamala Harris and JD Vance, Donald Trump’s running mate, have presented proposals to modify this credit, each with distinct approaches and objectives.
The Child Tax Credit is a measure that provides financial assistance to families with young children. During the COVID-19 pandemic, this credit was temporarily increased to $3,600 per child, which helped many families better manage basic expenses during a period of significant economic uncertainty.
What the child tax credit is and why it matters
According to government data, this expansion helped lift 2 million children out of poverty, enabling their families to cover essential needs like food and childcare. However, this expansion was short-lived, and by the end of 2021, the credit reverted to its previous level of $2,000 per child. Despite the continued rise in the cost of basic goods and services, the Child Tax Credit has not returned to the levels of support it offered during the health crisis.
The economic impact of childcare on families
One of the biggest challenges for families with young children is the high cost of childcare. A recent report from KPMG highlights that between 1990 and April 2024, the prices of daycare centers and preschools have surged by 263%. This steep increase has become a significant burden on family budgets, making the Child Tax Credit even more relevant in helping families manage these rising costs.
In response to this reality, both Harris and Vance have proposed new measures to expand the CTC, though their approaches and the figures they suggest are quite different.
JD Vance’s proposal: an unrestricted income approach
JD Vance has put forth a proposal aimed at increasing the Child Tax Credit to $5,000 per child. A key feature of his plan is the elimination of income restrictions, allowing all families, regardless of their income level, to benefit from the credit. This approach seeks to broaden the reach of the CTC, providing more substantial assistance to a larger number of families.
However, Vance’s proposal has sparked debate, as removing income restrictions could lead to a significant cost for the government, a concern shared by many lawmakers. Despite these concerns, Vance defends his proposal by arguing that providing broader economic support could positively impact family finances and, over the long term, the nation’s economy.
Kamala Harris’s plan: a targeted and tiered credit
In contrast, Kamala Harris proposes a different approach to expanding the Child Tax Credit. Her plan suggests increasing the credit to $6,000 per child in the first year of life and to $3,600 annually for the following years. Unlike Vance’s proposal, Harris maintains the current income restrictions, meaning that only families earning less than $400,000 annually (for couples) or $200,000 (for individuals) would be eligible for the expanded credit.
Harris’s proposal aims to provide greater support during the early years of a child’s life, which are often the most expensive for families due to costs like daycare, diapers, and other essential items. This more focused approach intends to offer more significant assistance when families need it most, while also keeping program costs under control.
Refundability of the credit: a key issue for low-income families
A crucial aspect that remains unclear in both candidates’ proposals is whether the Child Tax Credit will be refundable. Refundability is vital for low-income families who often do not owe enough in taxes to fully benefit from a non-refundable credit. If the credit is refundable, these families could receive a direct payment, significantly increasing the financial support they receive.
Both Harris and Vance have left this point unresolved, and their decision on this aspect could greatly influence the effectiveness of their proposals, particularly in terms of combating child poverty.
The debate surrounding the expansion of the child tax credit
The expansion of the Child Tax Credit has been a recurring topic in recent congressional debates. In fact, the House of Representatives passed a bill aimed at restoring the credit to its pandemic-era level, but this bill was blocked in the Senate. Republicans argued that the expansion would be too costly, while Democrats pointed out that the measure could lift an additional 400,000 children out of poverty in its first year.
The lack of consensus on expanding the CTC reflects the ideological and economic differences between the two major political parties in the United States. While some view the expansion of the credit as a necessary investment in children’s well-being, others see it as an unsustainable expense for the state.
