Prosperity Now Applauds Senator Booker for Bill to Help All Children Build Wealth and Reverse Economic Inequality
For Immediate Release Contact: Kristin Lawton, 202.207.0137
Prosperity Now applauds today’s announcement by Senator Cory Booker (D-NJ) that he plans to introduce a bill that would make a substantial investment in the futures of American children and help greatly reduce wealth inequality and the racial wealth divide. The American Opportunities Accounts Act would give every child born a fair shot at the American Dream by providing them up to $45,000 to invest in wealth-building opportunities, such as higher education or homeownership.
Today, just as 40 percent of Americans are just one financial emergency away from economic ruin, the richest 25 Americans have more wealth than the bottom 56 percent of the United States population combined. At the same time, households of color own a fraction of White households’ wealth. This is particularly true for median Black and Latino households that, when durable goods such as a family car are subtracted, own just $3,400 and $6,300 in wealth, respectively, compared to $140,500 in wealth owned by their White peers. Just as alarming, all of these disparities come against the backdrop of the recently enacted Tax Cuts and Jobs Act, which concentrates an overwhelming amount of its $1.9 trillion benefits in the hands of wealthy, mostly White, households, further driving economic inequality and the racial wealth divide to shocking new heights.
Starting at birth, the American Opportunities Accounts Act would provide every child with the economic tools needed to get a jump start towards building economic security. In addition to receiving an American Opportunities Accounts in their name, each child would receive an initial investment of $1,000 in their accounts. Every year, up until the child turns 18, the accounts would be augmented through automatic, yearly investments of up to $2,000, with those from lower income households receiving higher annual deposits. For children that come from our lowest income-earning households, the investments made by the American Opportunities Accounts Act could total as much as $34,000 by their 18th birthday. With interest, this could grow into a nest egg of more than $45,000, which the child can then use to access long-term wealth building opportunities, including higher education and homeownership.
“Children of low-income households, particularly households of color, are at a disadvantage when it comes to achieving economic mobility,” said Andrea Levere, President of Prosperity Now, “By giving all children an investment and source of wealth to leverage for their future, and giving extra supports to those in households with the lowest income, we can start to level the wealth-building playing field. This piece of legislation from Senator Booker would be a massive step in the right direction and Prosperity Now applauds him for his leadership on this crucial and timely issue.”
In addition to investing in the future of all children, especially those from low- and moderate-income families, the American Opportunities Accounts also aims to reduce the startling level of economic inequality the country faces today. In large part, it does so by increasing the Capital Gains and Estate Tax to ensure that wealthy families pay their fair share, rather than allowing these families to unfairly circumvent the system to pass lifelong advantages to the next generation at little to no cost.
Given the ever-changing landscape our country’s demographics, we know that addressing rising economic inequality—particularly the racial wealth divide—is imperative to securing a strong economic future for all of us. By leveraging the work that we and others have done throughout a number of cities, localities and states to provide children with hope in concrete form through children’s savings accounts in their name, the American Opportunities Accounts Act would not only put us on the path to addressing these growing problems, it would ensure that every child has the resources they need to achieve their future aspirations as soon as they are born.
Prosperity Now believes that everyone deserves a chance to prosper. Since 1979, we have helped make it possible for millions of people, especially people of color and those of limited incomes, to achieve financial security, stability and, ultimately, prosperity. We offer a unique combination of scalable practical solutions, in-depth research and proven policy solutions, all aimed at building wealth for those who need it most.