USAccounts Act: Investing in the Future of America’s Children
With inequality at historic highs and recent tax legislation that mostly benefits corporations and the wealthy, many of us are deeply concerned about Congress’ poor choices. Today, however, we are happy to announce a positive piece of legislation coming out of DC that starts kids on a path to a brighter future.
Representative Joseph Crowley (D-NY) and Representative Keith Ellison (D-MN) have reintroduced the “USAccounts Act: Investing in America’s Future Act of 2018” to create universal Children Savings Accounts (CSAs) for all children in the United States. This bill would make access to savings—and higher education—a reality for all Americans. Rather than investing in those who don’t need additional financial backing, corporate America and the rich, this bill will invest in those who really need support: America's children.
Here's how the program would work: the legislation directs the U.S. Department of the Treasury to create a new savings program called USAccounts, into which $500 initial seed deposits are automatically disbursed to every child at birth. The accountholder, family and friends would have the opportunity to contribute up to $2,000 into the account every year, and the U.S. Department of the Treasury would match the first $500 contributed each year. Families that qualify for the Child Tax Credit and deposit into their children’s CSAs would receive an additional tax credit of up to $500 for every dollar they deposit. Although the USAccount is intended for higher education expenses, after children turn 18, the savings, matches and seed money can also be rolled into a private savings account, retirement account or similar savings vehicle.
We know that children raised in low-income families with little savings have a fifty-fifty chance of remaining at the bottom of the income ladder as adults. Research shows that low- and moderate-income children with less than $500 saved for college are three times more likely to enroll in college and four times more likely to graduate than children with no savings. The USAccounts Act will boost the savings of low- and moderate-income families and help the four million children born every year save for higher education.
Prosperity Now is deeply invested in the work of CSAs through our Campaign for Every Kid’s Future, which has connected more than 382,000 children to a CSA. Today, thirty-two states and the District of Columbia have CSAs with a total of 54 programs. Around the country, programs have piloted innovative ways of connecting kids with CSAs. St. Louis College Kids, which is funded by parking fees collected by the City of St. Louis Treasurer's Office, automatically creates a CSA for every kindergartener entering public or charter schools in the City of St. Louis. Nevada College Kick Start Program, administered by the Nevada State Treasurer’s Office, provides all public school kindergarteners in the state with a seed deposit of $50 in a 529 account. The USAccounts Act can leverage these examples to make the national program benefit all children.
In this time of massive economic inequality, CSAs have the potential to change the future of today’s children. The “USAccounts Act: Investing in America’s Future Act of 2018” will offer every child the opportunity to start their financial future on the right foot.
Want to help America’s children get started on a path to success?