Estate Tax Hike May Help Fund Cory Booker, Ayanna Presley Plan to Give $1,000 to Each Newborn
A Democratic proposal to give $1,000 "baby bonds" to every U.S. newborn may be partially funded by increasing the federal estate tax rate.
The American Opportunity Accounts Act was reintroduced by Sen. Cory Booker (D-N.J.) and Rep. Ayanna Pressley (D-Mass.) on Thursday. It would establish savings accounts for each baby born, with an initial federal deposit of $1,000. Booker first proposed the program in 2018. During the following year, he wrote that "by the age of 18, low-income account-holders would have access to nearly $50,000 in seed capital to do the kind of things that create wealth and change life trajectories, including putting a down payment on a home."
Although the reintroduced proposal does not detail how the program would be funded, Booker initially said that it would be at least partly paid for by raising estate tax rates and lowering the threshold to apply to estates over $3.5 million. A 2019 analysis of the proposal from the bipartisan nonprofit organization Committee for a Responsible Federal Budget (CRFB) provided details on funding the program by raising investment income taxes and federal estate tax rates.
The estate tax, which is sometimes colloquially known as a "death tax," imposes new taxes on money and property that a deceased person leaves behind before it is transferred to anyone who inherits the money. The tax has generally only affected the estates of those who were very wealthy when they died, applying to "estates with combined gross assets and prior taxable gifts" of at least $11.7 million as of 2021, according to the IRS.
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