U.S. Senator Cory Booker (D-NJ) wants to address the growing wealth gap in the country.
“Dramatic disparities in income are happening where you have a third of families in America that have no transferrable wealth or negative transferrable wealth to their children. And our laws right now are designed to benefit wealthier Americans,” he said at Yahoo Finance’s All Markets Summit in Washington, D.C., on Tuesday.
Booker says he has a solution — baby bonds. He plans to introduce the American Opportunity Accounts Act, aka the “baby bonds bill,” in the Senate this week.
The bill proposes giving each child born in the U.S. a $1,000 savings account. Each year, the government would deposit as much as $2,000 each into the account, depending upon the family’s income level.
“The poorest of the poor could get up to $2,000 every year … By the time they’re 18 years old, they could have a nest egg of about $50,000. Depending [on] the income scale, you’ll have everything from a few thousand for the richest of the rich, to … upwards of $50,000” for children from families with lower incomes, he said.
The children would not be able to access the account until they’re 18 years old. After that, the funds could only be used for purchases that can help generate future wealth, such as buying a home, tuition, or classes to develop new skills.
‘Trampoline into the middle class’
“This is a bill that ultimately is about income. It’s not about black people get this money, white people get this money. It’s about economic empowerment. And in this country, if you have a nest egg, imagine you’re [….] 18 years old and you wanna now make that investment. ‘I can get my college education, boom, trampoline into the middle class. I wanna buy a house, boom, you have wealth that you can pass on,” he said.
Booker estimates that the price tag for the legislation could be as high as $70 billion — and proposes it be paid for by re-adjusting the tax code.
“This is not some radical need to create more taxes. It’s like, hey, let’s go back to where we were in the Obama administration. That can be paid for by re-adjusting the estate tax to what it was in ’09,” he said.
“This is actually a very capitalist idea. This idea that people who have resources have more agency and can make more decisions,” he said.
Booker, who said he’s considering a presidential bid in 2020, wants to steer clear of partisan labels. “I’m like, ‘Stop with the labels. Talk to me about the policies that I support,’” he said.
Sibile Marcellus is an on-air reporter covering the day’s top stories in business for Yahoo Finance’s three daily live shows. Follow her on Twitter @sibileTV.
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