The anticipation surrounding Democratic presidential nominee Kamala Harris’s promise to make the temporary expansions to the child tax credit (CTC) and earned income tax credit (EITC) permanent is palpable. These expansions, put into place by the American Rescue Plan (ARP) Act of 2021, hold the potential to uplift many low-income families by reducing poverty and hardships in the short term and improving education outcomes and future earnings in the long term.
- A larger Child Tax Credit (CTC) for families with newborns is a standout in Harris’s proposal. This boost would see parents receiving up to $6,000 for their newborns – a substantial increase from the $3,600 ARP child credit for young children under 6 years old. The potential impact on low-income families, if well planned and implemented, could be significant.
- The estimated cost of reinstating the 2021 expansions of the EITC and CTC, along with a larger CTC for newborns in 2025, is projected to be $105 billion for that year. This cost would rise after 2025 as the CTC enhancements from the 2017 Tax Cuts and Jobs Act are set to expire.
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The combination of the expanded CTC and the extra credit for newborns could see low-income families with children gaining an average of $2,750. The families of nearly all newborns in 2025 stand to benefit from a larger credit, most notably those whose families’ incomes are insufficient to receive the full benefit under current law.
The potential for a larger CTC for newborns to positively impact the lives of families is immense. A $6,000 credit would more than triple the CTC received by most families today, with low-income families standing to benefit even more significantly. This investment in children at a crucial time in their lives could have far-reaching effects on their health, education, and future earnings.
- Policymakers must ensure that a larger CTC for newborns is delivered efficiently and without administrative hurdles. Families currently have to wait months after the birth of their child to receive the CTC, which can pose challenges, especially for those unfamiliar with the tax system.
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Harris’s proposal raises important questions about the administration of the benefits. Should the $2,400 newborn bonus be administered separately from the $3,600 CTC for young children? Should payments be made monthly or claimed on a tax return? Clear guidance and support will be essential to ensure that families can access these benefits without obstacles.
In conclusion, the potential for a larger CTC for newborns to support families during a vulnerable time is immense. With careful planning and effective administration, this benefit could serve as a lifeline for families in need, providing them with the resources they require when they need it the most.
