These 6 Proposals From Kamala Harris Could Help Middle-Class Earners Most
Written by
Sean Bryant
Edited by
Chris Cluff
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As the presidential election draws nearer, Vice President Kamala Harris, the Democratic nominee, has made several proposals to lower the cost of living for middle and working-class families. Although Harris’ plans share similarities with aspects of Bidenomics, there are also several differences you should be aware of.
How does the presidential candidate hope to empower the middle class? What are her plans for strengthening the economy? Here’s a look at some of Harris’ major proposals.
Housing Support
It’s no secret that U.S. home prices are at all-time highs. In fact, they’ve skyrocketed by 54% since 2019, according to a Washington Post report. To address this issue, Harris has presented a four-year plan that provides up to $25,000 in down-payment support and a $10,000 tax credit for first-time homebuyers.
Although the proposal certainly sounds promising, experts have mixed views on its effectiveness. According to the Committee for a Responsible Federal Budget, this new policy would cost the country $200 billion over a decade. Plus, some experts note that down-payment support might have the opposite effect of what was intended. Since the demand for housing would increase, the prices likely would grow, too.
“Among the most noteworthy proposals is the $25,000 down-payment assistance program for first-time homebuyers,” said Adnan Rasool, associate professor at the University of Tennessee at Martin. “Given the rising cost of housing and economic challenges faced by the middle class, this assistance could significantly increase homeownership rates, stimulate economic growth through new home construction, and strengthen the real estate sector.”
Food Prices
If you’ve been shocked at the price increase of your favorite foods, you’re not the only one. Although grocery prices are no longer climbing as much as they did in previous years, many Americans are still frustrated by the high costs. To combat this problem, Harris promises to introduce a bill to Congress that limits price gouging by food producers and grocers.
Increased Child Tax Credit
Among Harris’ most important proposals is restoring the American Rescue Plan’s expansion of the child tax credit to as much as $3,600, up from $2,000.
It’s no secret that during a baby’s first year of life, there are many expenses to think about – from diapers to car seats. That’s why the presidential candidate also plans to add a new child tax credit of up to $6,000, which would significantly support middle-class and lower-income families.
“Vice President Harris’ proposed increases to the child care tax credit are likely to have a major impact on middle-class families with children,” said Stephen Kates, CFP and principal financial analyst for RetireGuide.com. “Child care is a substantial cost for those with young children, and this proposal would nearly double the credit from $2,000 to as much as $3,600 per child under 6 years old.
“This policy was in effect in 2021 during the pandemic but was then discontinued thereafter. During the time this policy was in effect, the number of childhood poverty cases fell by almost half. Her plan would also offer a higher credit for children in their first year of life, up to $6,000.”
Small Business Tax Deduction
If elected, Harris is aiming to attract 25 million new small business applications. How does she plan to achieve this? By making filing taxes “cheaper and easier” than ever before. In fact, in one of her newest proposals, Harris said she would increase the small businesses’ $5,000 allowable deduction for startup expenses to $50,000. Additionally, new companies could decide whether to allocate the tax deduction across multiple years or claim the full amount once they have profits.
“Reducing regulation on small businesses would also benefit middle-class business owners,” Kates said. “This proposal aims to make operating a business easier by simplifying tax filing, making it easier to do business across states, and requiring one-third of federal contracts to go to small businesses. Small business creation has been on the rise since the pandemic, and these kinds of incentives could continue to boost the creation of new businesses.”
No Tax on Tips
If we had to list all of the differences between both presidential candidates, it would take some time. But Harris and Donald Trump do share a surprising point of agreement: the desire to eliminate taxes on tips. Under the current law, employees are required to inform their employers of all tips over $20 per month, which are then taxed by the federal government.
While this proposal has generated quite a buzz in the media, it is a relatively niche issue. According to Yale University’s Budget Lab, less than 3% of the entire U.S. workforce regularly receives tips. Plus, around 37% of these workers earn so little that they don’t pay income taxes at all.
Medical Costs
Significant changes can be expected in medical costs as well. Harris’ goal is to speed up a Biden administration effort that would help lower the cost of prescription medications and increase transparency regarding pricing practices. As the proposal reveals, Harris aims to cut the price tags for some of the most commonly used drugs by 40% to 80% starting in 2026.
Another promise that has caught the eye of the media is Harris’ pledge to work with state entities to cancel medical debt for up to 3 million Americans.
The Bottom Line
Since Harris replaced Joe Biden as the Democratic nominee, she has unveiled a list of proposals that promise to support low and middle-income Americans. From making housing more affordable to lowering prescription drug costs, her plans address problems that have long been a concern to Americans.
While these proposals sound promising, remember to take them with a grain of salt. Harris’ new proposals would require congressional approval, and she has not specified how these costly plans would be paid for, especially with the swiftly rising federal debt.
Editor’s note on election coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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