Who would Kamala Harris’ tax plan benefit? How she wants to tax different income groups
Kamala Harris’ most ambitious individual tax cuts would largely benefit younger, lower-income parents, according to am analysis by the nonpartisan Tax Policy Center released this month.
Most other people wouldn’t save very much.
Economic issues are consistently at the top of voters’ concerns in this election season, and the centerpiece of the vice president’s proposals are a series of tax reductions aimed at benefiting middle and lower income households.
Overall, said Howard Gleckman, Tax Policy Center senior fellow, Harris’ major individual tax cuts “would benefit only a bit more than one-quarter of households. But those who do qualify would enjoy generous tax breaks.”
There is a problem looming over Harris’ plan, though: The cost.
“Lawmakers really do need to concentrate on fiscal implications,” said Kyle Pomerleau, American Enterprise Institute resident fellow, at a briefing for reports on taxes this week.
Figuring out a way to pay for tax breaks is going to be a big issue, added Arshi Siddiqui, former adviser to House Speaker Nancy Pelosi and now a partner at the Akin law firm in Washington. “It’s going to be a challenge to say the least.”
The biggest winners in a Harris tax plan would be very low-income households, those making less than $32,800. Almost 80% of those families with children would get a tax cut, averaging about $2,800.
Others fare less well from her plan, outlined in an detailed economic blueprint, the Tax Policy Center said..
Who wins, who loses
Overall, the center’s analysis found:
▪ Lower income households. The center projected that for all households with incomes of $32,800 to $63,000, their 2025 after-tax income would drop by about 1.8% of after-tax income, or $770.
▪ Middle incomes. Those with household incomes of $63,000 to $113,100, would save 1.1%, or $810.
▪ Upper middle class. These households have incomes of roughly of $113,100 to $205,800 and would save 0.8%, or $1,070.
▪ Wealthier households. They would get very little, if anything. Those in the top 20% of earners, with incomes of more than $205,800, would get an average tax cut of 0.1%, or about $350.
The top 1%, or those making $4.7 million or more, would get no reduction at all, and probably see their rates go up..
Harris’ tax plan
The Tax Policy Center’s data looked at Harris’ most far reaching tax cut ideas. Among the most significant are:
▪ Child tax credit. Currently, qualifying parents can get a credit of $2,000 per child. The credit phases out for those with adjusted gross incomes of more than $400,000 for a joint return and $200,000 for an individual return.
During the Covid pandemic, the credit was raised to as much as $3,600 per child. Harris wants to revive those limits and add a credit of $6,000 for newborn infants.
▪ Earned income tax credit. Harris would expand the reach of this tax break for low and moderate income families. It’s in effect a subsidy to those workers.
▪ First-time homebuyer’s credit. Harris proposes giving first time homebuyers $25,000 in down payment assistance on their first home.
The overarching problem with all these ideas is that they’ll cost lots of money, and the federal government is already mired in record debt.
The nonpartisan Committee for a Responsible Federal Budget estimates that Harris’ child care credit expansion would cost $1.3 trillion over 10 years. It predicts her homeowner plan has a $350 billion price tag.
Overall, Harris’ tax and policy proposals would cost $3.5 trillion. That figure includes Harris plans to increase taxes on the wealthy and on corporations.
This story was originally published October 23, 2024 at 4:30 PM with the headline "Who would Kamala Harris’ tax plan benefit? How she wants to tax different income groups."
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