Vice President Mike Pence and Senator Kamala Harris faced off in the vice presidential debate Wednesday. Among the first topics of conversation was the economy. Both Pence and Harris discussed President Trump's landmark tax reform, the Tax Cuts and Jobs Act (TCJA), which Pence said gave families thousands more in disposal income and which Harris said will ultimately cost Americans $2 trillion.
In her role as a senator, Harris has proposed various pieces of tax-related legislation. "She's definitely been bigger on all of these [tax] programs that would deliver cash to low- and middle-income families and people," says Elaine Maag, principal research associate at the Urban-Brookings Tax Policy Center.
A month out from the election, a lot of people are wondering what a Biden-Harris administration would mean for ordinary Americans in terms of taxes and other pocketbook issues. Here are a few of Senator Harris's most significant tax proposals from her time in the Senate, as well as her thoughts on the TCJA.
In 2018, Senator Harris proposed the LIFT (Livable Incomes for Families Today) Act, which would provide an annual income tax credit of up to $3,000 for individuals earning between $3,000 and $50,000, and up to $6,000 for married couples earning between $6,000 and $100,000.
"Americans are working harder than ever but stagnant wages mean they can't keep up with cost of living increases," said Senator Harris on her website. "We should put money back into the pockets of American families."
Currently, the earned income tax credit (EITC) is targeted toward low-income working families. Its value is based on their annual income, filing status, and number of kids. A family with one child and annual income between $10,540 and $19,330 in a year, for example, could qualify for a refundable tax credit of $3,584, according to Tax Policy Center estimates. Qualifying families get that money as part of their refund after filing their taxes.
The LIFT Act was proposed as an additional credit which "differs [from EITC] in two ways that are very important," says Maag. "The first is that benefits are based on your marital status rather than the number of children in your household." The EITC is focused on households with children, so many people who could use the tax credit but who aren't parents are left out.
Secondly, "if you're very low-income," getting that financial assistance only after you file your taxes "can be a long time to wait," she says. Harris' tax credit would instead be delivered throughout the year.
Those eligible would fill out an IRS form at the beginning of the year. Then depending on how much they qualify for, the IRS would then send single people up to $250 per month and married couples up to $500 per month. Any discrepancies would be resolved when they filed their taxes the following year. If anyone got more than they qualified for, for instance, they'd owe the IRS money.
In 2018, Harris also proposed giving home renters a tax break with the Rent Relief Act, which would provide a tax credit to Americans who make less than $100,000 per year (or $125,000 per year in more expensive areas) and spend more than 30% of their earnings on rent.
As with the LIFT Act, this credit would be provided to qualifying Americans on a monthly basis.
Video by David Fang
Because this type of credit has never been provided on a federal level, it's hard to say exactly how it would work. In theory, Americans would let the IRS know at the beginning of the year how much they anticipate earning and how much they expect to pay in rent. Depending on their income level, a qualifying individual would receive funds worth between 25% and 100% of the rent they pay over that 30% threshold.
Again, any discrepancies would likely be settled at tax time.
Senator Harris has been outspoken about her disapproval of the Tax Cuts and Jobs Act. Among its many provisions, the TCJA nearly doubled the standard deduction and changed most of the tax brackets. The top tax rate for the highest-income workers fell from 39.6% to 37%, for example.
The Act also changed the structure of several itemized deductions, such as capping the deduction for state and local taxes at $10,000.
Critics charged that the act primarily helped companies and the wealthy. In a 2019 tweet, Harris said Trump "passed a tax bill that benefited the top 1% and the biggest corporations in our country."
If the Biden-Harris ticket wins, taxpayers could be in for another shakeup affecting their future tax filings: "On day one," Harris said in the vice presidential debate, "Joe Biden will repeal that tax bill. He'll get rid of it."
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