An Oregon Democrat says he wants to create federal legislation that would set up each child born in the United States with a savings account as part of a major revamping of the country’s tax code.
Sen. Ron Wyden, on track to become the Senate’s top Democrat on tax policy, says he wants to draft legislation that would provide each child with a $500 savings account as a way to curb poverty.
Speaking earlier this month at the University of Southern California School of Law and the Urban-Brookings Tax Policy Center, Wyden said universal savings accounts for newborns would “really put a dent in the poverty rate.”
He described the country’s current tax code as a “dysfunctional, rotten mess of a carcass.”
While he has yet to write the legislation, Wyden cited a 2009 proposal by Sen. Charles Schumer, a New York Democrat, as a possible blueprint for a future plan that would give all children born in the U.S. $500 toward the cost of college, buying a home or to be used toward retirement.
Although Wyden’s proposal would be on a federal level, there are several similar initiatives in play on state and local levels.
City officials in San Francisco offer college savings accounts to every kindergartner in the city school district. Each student receives $50 deposited into a trust fund under the city’s name. Some low-income children qualify for more - up to $100 in the trust fund.
The San Francisco plan allows families to add money into the account over the years but they can only withdraw funds for educational purposes, such as books or tuition, once the child is enrolled in college. If a child chooses not to go to college or to pursue secondary education, the account dissolves when the recipient turns 25, with any personal savings returning to the account holder and matching funds going back into the city program.
So far, about 7,500 children have city-sponsored college savings accounts.
Later this year, state officials in Hawaii are expected to take up the topic. A state Senate proposal establishes and appropriates funds into the Universal Children’s Savings Account Trust Fund.