Her goal is to foster a middle class. How will she achieve this?

“Building the middle class will be a key goal of my presidency,” Vice President Kamala Harris said at a political event in Atlanta on Tuesday night.

“A strong middle class makes a strong America,” the de facto Democratic presidential nominee told more than 10,000 supporters.

“And to keep the middle class strong, we need to ensure families are protected from the rising cost of living so they have a chance not just to survive, but to get ahead,” Harris added.

Here’s how Harris could achieve this, based on the policies she advocated for during her first presidential run in 2020 and as a senator.

More information on personal finance:
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What a Kamala Harris Administration Means to You
What position Kamala Harris might take on tax policy, experts say

One of Senator Harris’ signature proposals, the LIFT the Middle Class Act, would provide low- and middle-income workers with an annual tax credit of up to $3,000 per person (or $6,000 per couple), on top of the benefits they already receive.

According to the Committee for a Responsible Federal Budget, the deduction amounts to a “significant tax cut.”

The Harris campaign did not immediately respond to CNBC’s request for comment.

Since the LIFT Act was first proposed in 2018, the cost of living has only skyrocketed, hitting working-class Americans especially hard.

For these households, “real incomes have either declined or remained flat due to inflation,” Thomas Phillipson, former chairman of the White House Council of Economic Advisers, told CNBC. That has left many workers less confident about their financial situation and less satisfied with President Joe Biden’s handling of the economy.

At the same time, the rise of artificial intelligence is raising concerns about long-term job security.

In that context, there is a “good case” for reinstating tax credits for people below a certain income threshold, according to Laura Feldkamp, ​​a professor of finance and economics at Columbia Business School.

“A lot of people have the question, ‘Will AI take my job?’ Some people’s hard-earned skills will become obsolete,” she said. “One way to address that is to increase social security.”

But tax credits like LIFT would also be very costly, according to Tax Policy Center estimates from 2018 and 2019.

At the time, Harris proposed repealing provisions of the Tax Cuts and Jobs Act for taxpayers making more than $100,000 a year to help pay for the additional financial aid.

But such a credit may be hard to fund now amid growing concerns about the federal budget deficit. Harris also has to deal with trillions of dollars in expiring tax cuts enacted by former President Donald Trump by 2025.

The current version of the LIFT Act could most benefit renters, who are often in the bracket that qualifies for the tax credit, said Francesco D’Acunto, an associate professor of finance at Georgetown University.

D’Acunto and other experts suggest the LIFT Act could be a better aid package than the 5% rent cap proposal Biden unveiled on July 16, which would call for Congress to limit rent increases to 5% for landlords with 50 or more existing homes or risk losing their federal tax breaks.

Governor Harris also supported the idea of ​​rent caps at a campaign rally in Atlanta, saying, “We will take on corporate landlords and put a cap on unfair rent increases.”

But economists have found that such policies have unintentionally reduced the supply of rental housing, and a February Federal Reserve report found that rent control policies could have an even bigger impact on an already relatively scarce supply.

Rental vacancy rates, or the percentage of total properties available for rent, are a measure of the tightness of the rental market, and the higher the vacancy rate, the easier it is to find a home, according to the Fed.

The central bank said the overall vacancy rate fell to 5.6% in 2021, the lowest level since 1984. Supply has since recovered, leveling off at 6.6% in April, according to Census data via the Fed.

While rent caps may give consumers the impression that prices won’t rise significantly, they can also have negative side effects, such as causing landlords to pull properties off the rental market, said Carl Widerquist, an economist and philosophy professor at Georgetown University.

Plus, landlords who lose the federal tax credit will still be able to raise rents, said Jacob Channell, senior economist at LendingTree.

Dacunto said the benefit of the LIFT tax credit is that it doesn’t create the market distortions that rent caps do, “but instead, we’re actually very directly helping to mitigate the impact of rent inflation from the renter’s side,” he said.

Widerquist added: “We often give tax breaks to all homeowners in the name of making it easier for them to own a home, but we don’t give those same tax breaks to renters, who are the ones who are struggling to become homeowners.”

LIFT was first proposed years ago when Congress temporarily expanded the child tax credit during the COVID-19 pandemic, but experts say it could become a bigger priority now.

The American Rescue Plan increases the child tax credit from $2,000 to $3,000 and provides an additional $600 for children under age 6 in 2021, with families receiving up to half the amount up front in monthly payments. Harris said in her 2021 speech that the child tax credit changes are one of the “most important” and “most impactful” parts of the bill.

The child poverty rate plummeted to a record low of 5.2% in 2021, largely due to the economic expansion, according to a Columbia University analysis. Then, in 2022, as pandemic relief measures expired, the poverty rate more than doubled to 12.4%, according to the U.S. Census Bureau.

“While the previous administration gave tax cuts to billionaires, we gave tax cuts to families through the child tax credit and cut child poverty in America in half,” Harris said at a political event in North Carolina in late July, before Biden dropped out of the race.

Biden’s fiscal 2025 budget aims to restore the 2021 child tax credit increase, and House lawmakers passed a bipartisan tax reform bill in January that included an expansion of the child tax credit. The Senate is scheduled to hold a procedural vote on the bill on Thursday, forcing lawmakers to take a position on the issue ahead of November.

Strengthening tax incentives “is a big priority for Democrats,” said Garrett Watson, senior policy analyst and modeling manager at the Tax Foundation.

But he said it’s unclear whether Harris, now the clear front-runner for the nomination, will revisit her call for LIFT or focus on the Child Tax Credit, which is different in design but has similar goals.

“It’s very hard to say whether they’ll revisit certain policy options from a long time ago,” said Brett House, an economics professor at Columbia Business School.

For now, “other cultural and political issues will dominate.”

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