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Vice President Kamala Harris has made an expanded child tax credit central to her campaign, and former President Donald J. Trump boasts, “I doubled the child tax credit.” With a quick look, voters might think the child-rearing subsidy the rare matter on which the rival candidates agree.
It is anything but. The common vocabulary masks profound differences over which parents the government should help and what constitutes fairness for children in a country of great wealth and inequality.
Mr. Trump sees the $110 billion program mostly as a tax cut, which as president he increased to $2,000 per child and extended to high-income families. But his policy denies the full benefit to the poorest quarter of children because their parents earn too little and owe no income tax.
Ms. Harris would expand the tax cuts and add a large anti-poverty plan, sending checks to millions of parents with low pay or no jobs. That would turn a tax cut into an income guarantee, in a landmark expansion of the safety net.
Supporters of the Harris plan say the payments would shrink child poverty. Critics see an expensive welfare scheme that could weaken the willingness to work.
“They’re both talking about something called the ‘child tax credit,’ but they’re not at all talking about the same policy,” said Scott Winship of the conservative American Enterprise Institute.
It is rare that candidates sound so alike while diverging so greatly. Republicans say it is logical and fair for tax cuts to target taxpayers while other programs help the poor. To call blanket aid a tax cut “is an abuse of the term ‘tax cut,’” Mr. Winship said.
But Democrats say it is immoral to subsidize child-rearing and omit the poorest children. While the credit now increases gradually as poor parents earn more money, Democrats would make it “refundable” — fully payable to all low- and middle-income families. “We need to reach the most vulnerable kids,” said Representative Rosa DeLauro, a Connecticut Democrat.
A policy like the one Ms. Harris supports got a test of sorts as part of pandemic aid and helped cut child poverty in 2021 by more than half. But efforts to renew it failed amid unified Republican opposition.
The transformation of the credit from a middle-class tax cut designed by social conservatives to a progressive anti-poverty plan is an odd Washington tale. The credit sprang from the conservative Heritage Foundation and was intended in part to strengthen marriage. It passed a Republican Congress in 1997 with help from the firebrand speaker, Newt Gingrich, as he assailed the welfare state.
But as the credit grew with time, Democrats strove to add a second mission of poverty reduction. It now sends about $37 billion a year to some families who owe little or no income tax, a sum Ms. Harris could triple or more by increasing the payments and including all poor parents.
Democrats see a political lesson: Payments to poor families framed as tax cuts have flourished, while other aid is often stigmatized as “welfare” and weakened by race- or class-based attacks.
What follows is a guide to the debate.
How do the Trump and Harris plans differ?
Mr. Trump set current policy with a 2017 tax law that doubled the maximum credit to $2,000 and included families with incomes up to $400,000. (The old ceiling was $110,000). But millions of children get partial benefits, and one in 10 gets nothing, because their parents have low earnings and little or no income tax to offset.
Ms. Harris would raise the credit to $3,000 per child — $3,600 for preschoolers and $6,000 for babies. Most notably, she would fully include the poor, regardless of how much they work or earn. Although she calls her plan “tax relief for working families,” non-working parents would qualify.
Mr. Trump has pledged to renew the 2017 tax law, which expires next year.
Picture a single mother who works half time at $10 an hour while her two children attend school. Mr. Trump’s credit offers her about $1,200 a year. Ms. Harris would provide $6,000.
If a single parent with a toddler and a baby quits a job to care for them, the Trump credit provides nothing. The Harris plan provides $9,600.
The Harris plan could raise annual costs by $100 billion or more. Columbia University’s Center on Poverty and Social Policy found that a similar plan would reduce child poverty from current levels by 37 percent.
A few conservative lawmakers and policy analysts have indicated they might support a larger credit for the poor. But it is not clear how far they would go, especially for parents with little employment. Mr. Trump’s running mate, Senator JD Vance of Ohio, mentioned a $5,000 credit in passing but offered no details.
How did the credit begin?
Now championed on the left as an income guarantee, the credit arose from conservative fears that taxes were squeezing families and forcing some parents to work when they wanted to raise children full-time. In the early 1990s, Robert Rector and others at the Heritage Foundation warned of a “family time famine.”
Their solution, a child tax credit, made it into the Contract with America, a 1994 manifesto that helped Republicans capture Congress. Lobbied by the Christian Coalition and others on the religious right, Congress approved a credit of $400 a child.
Democrats tried to make it payable also to low-income parents who did not owe income tax. Republicans refused, and President Bill Clinton signed the credit into law as part of a larger bill.
How did a tax cut become an anti-poverty plan?
As Congress gradually raised the credit, Democrats won changes that made it “partly refundable” — payable to some needy families. But to get the full $4,000 for two children, a single parent must earn nearly $30,000, about twice the federal minimum wage.
The drive to include all poor families marks a change for a Democratic Party that once supported (with divisions) Mr. Clinton’s drive to “end welfare,” which imposed work requirements and pushed millions of families off cash aid.
One reason for the shift lies in partisan realignment — the party lost its conservative wing. Lawmakers have also been influenced by research showing that childhood deprivation often has lasting impacts. And the persistence of extreme inequality has left Democrats open to bold solutions.
Senator Michael Bennet, a Colorado Democrat who champions an expanded credit, began a recent interview by presenting a slide deck on inequality trends. Collectively, the top 1 percent of households now earns twice as much as the bottom half combined, he said, while the opposite was true a generation ago.
“Support for the child tax credit has grown because our economy has become less fair,” Mr. Bennet said.
By giving a larger credit to wealthy in 2017 and excluding many poor families, Mr. Trump gave Democrats a target for their fairness arguments. Mr. Bennet and a colleague introduced a bill that year that became a template for expanding the credit. Ms. Harris was the first co-sponsor.
What happened during the pandemic?
Taking office in 2021, the Biden administration added an expanded credit to its pandemic relief plans. It provided up to $3,000 a year per child ($3,600 for those under 6) and gave the full sum to all low-income parents. To limit costs, Congress kept the expansion to a year.
Child poverty plunged to the lowest figure on record. It fell 59 percent from its prepandemic level, to 5.2 percent (by the Supplemental Poverty Measure). The number of poor children shrank by more than five million. Other pandemic aid helped, but the Columbia center found the credit expansion alone cut the population of poor children by more than two million.
Supporters hoped the credit would prove too popular for Congress to let it lapse. But renewal efforts failed when Senator Joe Manchin III of West Virginia (then a Democrat, now independent) helped Republicans block it, warning the aid would discourage work.
The credit reverted to prepandemic limits, and child poverty has risen to 13.7 percent, modestly above prepandemic levels.
Still, the episode galvanized Democratic support. “We have been looking for the antidote to poverty for a long time, and we found it,” Ms. DeLauro said.
Why do critics oppose the expanded credit?
One concern is the cost. Many conservatives also worry that unconditional aid would weaken incentives to work or marry and increase the poverty it aims to reduce. “The long-term impact might be to reduce upward mobility,” Mr. Winship said.
While one study predicted 1.5 million parents would leave the work force, another predicted an impact a quarter that size. Since the 2021 experience was so brief, both extrapolate from other circumstances whose predictive force is uncertain.
The credit differs from traditional cash aid in one important respect: Poor parents keep it as their incomes grow, which may encourage work. Some supporters even predict an expanded credit would boost employment by helping parents afford child care or car repairs. Others argue a modest decline in work is a small price for a large poverty reduction.
The Clinton-era experience in “ending welfare” shadows the debate. Many conservatives say tough welfare laws have encouraged work and call the Harris plan a return to failed policy. Progressives say barriers to aid hurt the poorest children.
Opposition to an expanded credit is especially strong among leaders of poor states, which have the most to immediately gain. Among the 10 states with the highest share of children excluded from the full credit, nine are dominated by Republicans, according to data provided by Sophie Collyer of the Columbia center.
They include Mississippi, West Virginia and Louisiana. A credit expansion of the sort Democrats have proposed would nearly double the dollars those states receive.
What are the political lessons?
How did a program that once omitted the poor win support to send them billions?
One explanation is that (outside the pandemic) it has been limited to people with jobs, which increases Republican backing. Also, tax credits seem less like big government than spending programs, although the budgetary effect is the same.
In addition, the credit embeds help for the poor in a larger program, which helps mute racial and class opposition.
“There’s no question that helping low-income families through the tax code and including the middle class makes it easier,” said Robert Greenstein of the Brookings Institution.
Tactically, tying aid to taxes also gives Democrats chances at horse-trading. Almost every increase in the credit’s value to low-income families has come as Congress passed larger measures that cut taxes on the rich.
The credit can be imagined as two programs in one, like a Russian nesting doll. About half of the refundable money goes to Black and Latino families, according to estimates from Christopher Wimer of the Columbia center. Programs serving similar groups have often drawn stigmatizing attacks. But the tax-cutting part of the credit is much bigger and offsets that tilt.
The result is a distribution of dollars that mirrors the country’s composition — a tax credit that looks like America.
What is happening beyond Washington?
Eleven states have versions of the child tax credit that send full checks to the poorest families. Most were prompted by the 2021 federal expansion, and all but one were signed by Democrats.
Among the largest is Minnesota’s, which Ms. Harris’s running mate, Gov. Tim Walz, signed last year. It gives all low-income families $1,750 per child. The Columbia center estimated the measure would cut child poverty by a third.
About 50 countries have broad child benefits that include the poor, according to the International Labor Organization. The United States would have ranked among them only in 2021, during the credit’s temporary expansion.
A study of 30 rich countries found that expansion helped move the U.S. to 22nd in a best-to-worst ranking of child poverty rates — from next to last.
Progressives say the international comparisons show the U.S. is failing its children, but conservatives call them flawed, arguing that poor Americans have higher incomes than many foreign counterparts.
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