According to NBC, on June 9th local time, US President Trump held a roundtable meeting at the White House and strongly advocated for a core clause of the Republican policy bill – establishing a $1,000 investment account for every newborn in the United States. This measure aims to lay the foundation for the economic future of the younger generation in the US and also highlights the government’s determination to promote economic fairness and long-term growth.
According to the detailed content of this plan, the US government will establish dedicated accounts for all US citizen children born between January 2025 and January 2029, and name them “Trump Accounts”. The initial $1,000 contribution from the government will be deposited into an index fund linked to the overall US stock market. The account will be managed by the child’s legal guardian. In addition to the government’s contribution, the guardian or other private entities can also donate up to $5,000 annually throughout the child’s entire growth period to further replenish the account funds.
These funds will be specifically invested in index funds that track the US stock market index, with the aim of achieving long-term stable growth. However, the use of the account funds is strictly restricted: when the child turns 18, 50% of the account balance can be withdrawn; by the age of 25, the entire account funds can be used for important life development matters such as starting a business or education; and only at the age of 30 can the account holder freely manage all the funds in the account.
White House Press Secretary Levet gave high praise to this plan, stating: “If the ‘Beautiful Big Bill’ can be passed smoothly, it will truly change the lives of the working-class and middle-class families across the United States. This bill not only provides the largest tax reduction measures in history, increases the child tax credit, but also creates a remarkable new ‘Trump Account’ program. This undoubtedly will help young Americans embark on the right financial planning path and provide strong support for their future lives.”
During the event on Monday, the Speaker of the House, Johnson, emphasized the economic benefits brought about by the “Trump Account”. He pointed out that this plan not only can increase the actual disposable income of ordinary families and improve their economic conditions, but also can reduce the red tape in the operation of small businesses, create a more relaxed and favorable environment for business development, thereby further stimulating economic vitality and promoting the healthy development of the overall economy.
During the meeting, Trump specifically stated that this plan is “absolutely zero-cost” for taxpayers. The funding source will mainly rely on the cross-border remittance tax provisions in the “Beautiful Big Bill”. However, according to the latest data released by the US National Center for Health Statistics, the number of births in the United States in 2023 was as high as 3.6 million. If calculated based on the current government standard of providing an initial fund of $1,000 for each newborn, the “Trump Account” plan is expected to cost taxpayers $3.6 billion annually. This huge expenditure has raised doubts among some people about the sustainability of the plan.
It is worth noting that Michael Dell, the CEO of Dell Technologies, made an on-the-spot commitment: “Dell will provide an additional investment of the same amount as the government grant for the ‘Trump accounts’ of its employees’ children.” Additionally, executives from over a dozen companies such as Uber, Goldman Sachs, and Robinhood also attended this meeting. It is expected that these companies will invest billions of dollars in the accounts of their employees’ children. This positive response has given a strong boost to this plan, demonstrating the attention and support of the business community towards the financial planning of the younger generation.
However, this plan is not without controversy. Unlike the common tax-free education savings accounts, the “Trump Account” requires the deposit of after-tax funds, and when withdrawing, the account holder also needs to pay capital gains tax or income tax. Ann Riley, the CEO of Alpha Financial Advisors, said bluntly: “This plan lacks appeal for guardians.
The Trump administration has complicated an originally simple savings plan.” Many financial experts have also generally questioned the cost-effectiveness of the “Trump Account” as a long-term savings tool. Although the commitment of enterprises to additional investment brings certain favorable factors, the strict withdrawal restrictions and limited tax incentives make many parents, after weighing the pros and cons, prefer to choose the traditional savings method to plan for their children’s future finances. This situation indicates that the “Trump Account” plan may face many challenges during its actual implementation. How to optimize the plan to attract more families to participate becomes a question that the government needs to further consider.
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