Policy Backgrounders

The Vice President’s Tax Policies

August 01, 2024

Trusted Insights for What’s Ahead^®

After the President withdrew his candidacy last month, the Vice President heads to the Democratic Convention as the presumptive Presidential nominee. To elucidate her potential tax policy, it is helpful to review her signature tax proposal from her time in the Senate, to establish a refundable tax credit. She will also likely leverage the Administration’s proposed Fiscal Year (FY) 2025 tax policies as Congress considers whether to extend key provisions of the 2017 Tax Cuts and Jobs Act (TCJA) next year.

• As a Senator, the Vice President introduced legislation, the LIFT the Middle Class Act, that would have established a refundable tax credit of up to $3,000 for single tax filers or $6,000 for joint tax filers, with the credit beginning to phase out for workers earning more than $30,000 or $60,000, respectively.
• Any taxpayer 18 and older would be eligible for the LIFT Act refundable tax credit, and students would be able to count their Pell Grant funding as earned income, significantly expanding eligibility for this tax credit beyond typical rules for existing tax credits.       
• An analysis of the distributional impacts of the LIFT Act refundable tax credit suggests that 18-to 24-year-olds and taxpayers in the bottom 40 percent of the income distribution would benefit the most, with non-official estimates of the cost of the proposal ranging from $2.7 trillion to $3.1 trillion over the next decade.
• During the campaign, the Vice President will also likely strongly support the Administration’s FY2025 revenue proposals that increase taxes on corporations and higher-income households earning more than $400,000 to help guide her tax policies.
• Combined with recent debates in Congress on expanding the Child Tax Credit (CTC) and the upcoming expiration of key provisions of the TCJA, the revenue proposals from each Presidential candidate will set the stage for pivotal negotiations next year on tax policy that will have a significant impact on the nation’s fiscal outlook.