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Harris calls for child tax credit of up to ,000 for newborns
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Harris calls for child tax credit of up to $6,000 for newborns

U.S. Vice President Kamala Harris speaks at an event 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 unveiled an economic plan on Friday that includes an increase in the child tax credit of up to $6,000 as a tax relief for families with newborns.

The Democratic presidential candidate’s plan aims to restore the higher child tax credit introduced as part of the American Rescue Plan in 2021, which provided a maximum credit of up to $3,600 per child, according to a campaign fact sheet.

The 2021 tax credit was up to $3,000 or $3,600, depending on the child’s age and the family’s income. Harris’ proposed tax break would increase for middle- to low-income families one year after the birth of a child.

“We will give families a $6,000 tax credit in the first year of a child’s life,” Harris said during a political speech in Raleigh, North Carolina.

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The plan comes less than a week after Senator JD Vance of Ohio, former President Donald Trump’s Republican running mate, floated the idea of ​​creating a $5,000 child tax credit.

A Trump campaign official told CNBC: “Trump will consider significantly expanding the child tax credit available to American families.”

While Harris has followed in President Joe Biden’s footsteps with her proposal to expand the child tax credit, the $2,400 bonus for newborns is “different and somewhat surprising,” said Kyle Pomerleau, senior fellow and federal tax expert at the American Enterprise Institute. “To me, that sounds very much like a response to JD Vance.”

The Harris team did not immediately respond to CNBC’s request for comment.

“Cross-party dynamic” for the child tax allowance

Senate Republicans blocked an expansion of the child tax credit that passed with broad support in the House in early August, but Republican lawmakers are expected to reconsider the measure after the election.

“There is bipartisan momentum behind expanding the child tax credit,” said Andrew Lautz, deputy director of the Bipartisan Policy Center’s economic policy program.

There are cross-party efforts to expand the child tax allowance.

Andrew Lautz

Deputy Director of the Economic Policy Program at the Bipartisan Policy Center

The extent of the expansion and future borrowing will depend on which party controls the White House and Congress, but the bill passed by the House and negotiations in the Senate could be a starting point, Lautz said.

Future expiration of the child tax allowance

Without action by Congress, the maximum child tax credit will drop from $2,000 to $1,000 when Trump’s 2017 tax cuts expire after 2025.

The American Rescue Plan temporarily increased the maximum child tax credit from $2,000 to $3,000 or $3,600, depending on the child’s age. Families would receive up to half of that in monthly payments for 2021.

According to a Columbia University analysis, the child poverty rate fell to a historic low of 5.2 percent in 2021, largely due to the credit expansion.

If the child tax credit is expanded in the future, Pomerleau does not expect it to be as large as the tax relief proposed by Harris or Vance.

Given the federal government’s budget deficit, lawmakers are already grappling with trillions of dollars in expiring tax breaks that are “prohibitively expensive,” he said.

Raising the child tax credit to $3,000 or $3,600 could cost an estimated $1.1 trillion over 10 years, according to the Committee for a Responsible Federal Budget. Raising it to $6,000 for newborns could cost $100 billion.

The fact sheet on her campaign’s economic plan stated that Harris would fulfill her “commitment to fiscal responsibility” and would also demand higher taxes on wealthy Americans and large corporations.

Kamala Harris' current economic plan clearly targets budget costs: Ben Harris of Brookings

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