Kamala Harris Aims to Tackle Wealth Gap in Presidential Bid, Renewing Focus on Middle-Class Support
With President Joe Biden stepping aside from the 2024 presidential race, Vice President Kamala Harris is now the front-runner for the Democratic nomination. In her first speech since becoming the presumptive nominee, Harris emphasized her commitment to building up the middle class, declaring, "When our middle class is strong, America is strong." This echoes a key theme of her past work as a senator, particularly her signature "LIFT the Middle Class Act," a proposal aimed at providing tax relief to lower and middle-income workers.
Key Takeaways:
- Kamala Harris is prioritizing economic security for the middle class in her presidential campaign.
- The LIFT Act, first proposed in 2018, could offer significant financial benefits to renters, especially in the face of rising inflation.
- Harris’s focus on middle-class support could take a different form this time, potentially emphasizing the child tax credit.
The LIFT Act: A Promise of Tax Relief for Renters
The LIFT Act aimed to provide a tax credit of up to $3,000 per person (or $6,000 per couple) to lower and middle-income workers. While it was initially proposed to address income inequality, experts now suggest it could be even more relevant in today’s climate, particularly for renters.
Francesco D’Acunto, an associate professor of finance at Georgetown University, points out that renters are disproportionately represented in the income categories targeted by the LIFT Act. He argues that such a tax credit could be more effective than a rent cap in providing relief from rising rental costs.
D’Acunto highlights the potential negative side effects of a rent cap: landlords might remove their properties from the rental market, and those who lose federal tax breaks could still raise rents. On the other hand, the LIFT Act would provide direct financial assistance to renters, helping them counteract the effects of rent inflation.
Karl Widerquist, an economist and professor of philosophy at Georgetown University, emphasizes the need for such a benefit: "We very often give tax benefits to all homeowners in the name of making it more affordable for people to become homeowners, and we don’t give a similar tax break to people who are paying rent."
A Relevancy Renewed in a Changing Economy
The LIFT Act was initially proposed in a very different economic climate. Since then, the cost of living has climbed significantly, particularly impacting working-class households. Inflation has eroded real incomes, leading to declining confidence in financial stability.
Tomas Philipson, former chair of the White House Council of Economic Advisers, notes that inflation has left many working-class households struggling to keep up. This growing unease, combined with fears about job security in the face of AI advancements, makes the LIFT Act’s potential for providing social insurance particularly relevant today.
However, the high costs associated with implementing such a program, coupled with concerns over the growing federal budget deficit and the need to address trillions of expiring tax cuts, make its implementation challenging.
Shifting Focus: The Child Tax Credit Takes Center Stage
Another significant factor for the LIFT Act’s potential revision is the temporary expansion of the child tax credit, which was implemented during the Covid-19 pandemic.
The American Rescue Plan doubled the child tax credit to $3,000, with an additional $600 for children under age 6. This, combined with the monthly payments, led to a dramatic reduction in child poverty. However, the expansion was temporary and expired in 2022.
Harris herself has recognized the effectiveness of the expanded child tax credit, stating at a political event: "Whereas the last administration gave tax cuts to billionaires, we gave tax cuts to families through the child tax credit, which cut child poverty in America by half."
While the LIFT Act and the child tax credit differ in their approach, they share a common goal of providing financial support to families. Experts suggest that Harris may choose to focus on the child tax credit due to its proven effectiveness and greater political support. This, coupled with the complexity and rising costs of the LIFT Act, might make it a less appealing option in the current political landscape.
A Complex Landscape, A Challenging Future
While the LIFT Act has garnered support from many experts, its future remains uncertain. The political and economic landscape has changed significantly since its initial proposal. The growing budget deficit, the need to address expiring tax cuts, and the potential for renewed focus on the child tax credit all contribute to making it difficult to predict whether Harris will revive her proposal in its original form.
One thing is clear: Harris’s commitment to building up the middle class and addressing income inequality will remain a central focus of her campaign. The specific policy choices she makes, however, will be shaped by a complex interplay of political priorities, economic realities, and the changing needs of American families.
