Vance wants to raise the child tax credit to $5,000. Here's why that could be difficult Here's why that could be difficult
Sen. JD Vance, Former President Donald Trump's GOP running mate, wants to raise the child tax credit to $5,000
Sen. JD Vance of Ohio, former President Donald Trump's GOP running mate, wants to more than double the child tax credit. But the increase could be difficult to enact, policy experts say.
"I'd love to see a child tax credit that's $5,000 per child. But you, of course, have to work with Congress to see how possible and viable that is," he said Sunday on CBS' "Face the Nation."
Vance's idea would be a "relatively large expansion" compared to the current benefit worth up to a maximum of $2,000 per child for 2024, according to Garrett Watson, senior policy analyst and modeling manager at the Tax Foundation.
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Without action from Congress, the maximum child tax credit will drop from $2,000 to $1,000 once Trump's 2017 tax cuts expire after 2025.
During the pandemic, lawmakers temporarily increased the maximum child tax credit from $2,000 to either $3,000 or $3,600, depending on the child's age. Families received up to half via monthly payments for 2021.
The child poverty rate fell to a historic low of 5.2% in 2021, largely due to the credit's expansion, according to a Columbia University analysis.
Senate failed to pass a child tax credit expansion
Vance's comments come less than two weeks after Senate Republicans blocked an expanded child tax credit that passed in the House in January with bipartisan support.
If enacted, the bill would have improved child tax credit access and retroactively boosted the refundable portion of the tax break, which could have triggered refund checks from the IRS.
Democrats held the vote partially in response to Vance, who has positioned himself as a pro-family candidate. But the bill was expected to fail without a consensus from Senate Republicans on credit design.
Vance wasn't present for the recent Senate vote but described it as a "show vote" during the CBS interview, noting that it wouldn't have passed even if he were there.
Meanwhile, President Joe Biden and Vice President Kamala Harris will "continue to fight for an expanded child tax credit," National Economic Advisor Lael Brainard said in a statement.
Trump's campaign did not immediately respond to CNBC's request for comment.
How Vance's $5,000 child tax credit might work
"The child tax credit is obviously a priority of Democrats across the country," said Richard Auxier, a principal policy associate for the Urban-Brookings Tax Policy Center.
However, Vance's idea for expansion could be challenging as lawmakers face growing concerns over the federal budget deficit.
Increasing the child tax credit to $5,000 could cost "somewhere in the neighborhood of about $3 trillion" over 10 years, Watson from the Tax Foundation said.
"The immediate question is, of course, how to navigate the cost," on top of other proposed changes, including extensions for Trump's expiring tax cuts, he said.
There are also questions about Vance's proposed child tax credit design, how Vance's idea might work, including eligibility, work requirements and income phase-outs.
"Many Republicans are very skeptical of moving the child tax credit in a direction that would remove the work requirements of the phase-in," meaning they only want employed families to claim the credit, Watson said.
Vance's proposal could revive this debate within conservative and Republican circles as the 2025 deadline approaches, he said.
This story originally appeared on: CNBC - Author:Kate Dore, CFP®
