JD Vance and Kamala Harris have at least one thing in common: proposals to expand the child tax credit (CTC). Currently, the CTC offers households up to $2,000 per child under the age of 17. It phases in as wages exceed $2,500 (an incentive to work) and phases out for high-income workers (a disincentive to work). After 2025, the credit is scheduled to drop to $1,000 per child. In a recent Tax Notes article, we compared the expansion proposals and noted three important distinctions:

1. The proposed CTC expansions differ in the details. The Harris CTC expansion would be a $6,000 tax credit for newborns, $3,600 for young children, and $3,000 for older children. It would be fully refundable for low-income households and would begin phasing out at $75,000 for single filers and $150,000 for married filers. Vice presidential candidate JD Vance—would expand the credit to $5,000 per child, regardless of income. This means no phase in or phase out. The figure below plots the two CTCs proposals as well as the current $2,000 credit and scheduled $1,000 against earnings for a single filer with one child of various ages.

2. The cost of both proposals is very high, but the Vance plan costs much more. The Vance proposal would be roughly twice as costly as the Harris plan. Compared to current law (which assumes expiration of the Tax Cuts and Jobs Act (TCJA) at the end of 2025), the Harris plan would cost $2 trillion and the Vance plan would cost $3.6 trillion. If TCJA is extended, the additional cost of the plans are $1.2 trillion and $2.7 trillion, respectively.

3. Both proposals would reduce work incentives, but the Harris plan would be worse for work. We estimate that the Harris proposal would reduce labor supply by 210,000 full-time-equivalent (FTE) jobs by eliminating the earned income phase-in, introducing another phaseout for households earning more than $75,000 ($150,000 married filing jointly), and increasing the number of taxpayers in the phaseout of the larger credit. Vance’s larger credit would have roughly half the effect on work incentives (a reduction of 133,750 FTE jobs). Like the Harris proposal, the Trump-Vance credit would reduce the returns to work for low-income households, but it would increase the returns to work for high-income households by eliminating the credit’s phaseout. These labor supply estimates do not consider the effects of debt or the tax increases that would be necessary to finance these credit expansions.

Differences aside, the proposals share commonality: should either be enacted into law, the deficit will rise and work among lower-income households will be discouraged. While expanding the CTC can reduce child poverty, a worthy goal, the costs and disincentives must be carefully considered.