The racial wealth gap has been a topic of conversation among Democrats for a while now. On Wednesday, they appeared to finally find the solution they were looking for.
A New Plan
Cory Booker made a speech at the unveiling of the proposed bill. In it, he stated, “Americans today are having a harder time accessing homeownership, higher education, and a secure retirement than their parents did just a generation before them.”
Booker claimed that “upside down tax codes” in the United States favor the rich while overlooking the poor, particularly “Americans who are barely getting by and are unable to afford long-term investments to get ahead.”
The goal of the bill, called “Baby Bonds,” would be to fix the “broken” tax code by giving every American child “startup capital” for their life. The hope among Democrats is that it will decrease the wealth inequality that “holds Americans back from their full potential.”
Booker said later on in his speech, “I’m excited for the potential of American Opportunity Accounts to build a foundation for economic opportunity for all Americans while breaking the generational cycles of poverty for underserved communities in the process.”
How It Works
According to Booker and fellow Democratic Representative Ayanna Pressley, the program would be funded by raising taxes on estates and inheritances. This would allegedly result in a “major” redistribution of wealth to middle and lower-income Americans. Democratic lawmakers estimate that children born into families on the lowest income levels would have amassed around $46,000 by the time they begin higher education.
Those children would receive $2,000 a year under the new program. However, this number would decrease if the family's income were to increase. Children who were born into the upper limit of the program's eligibility would only end up with around $1,600 by the time they turned 18. Children who were born somewhere in the middle, with an estimated household income of $81,575 for a family of four, would receive around $7,000 when they turned 18.
In her statement, Pressley said, “The racial wealth gap in America is the result of generations of precise and intentional policy violence, so we must be as intentional and as precise about advancing policies that address it head-on. Baby Bonds are one of the most effective tools we have for closing the racial wealth gap and breaking the cycles of poverty and trauma that have prevented Black and brown folks from thriving in this country.”
Pressley also pointed out that the concept of baby bonds was gaining traction across the country. “It is no surprise that this idea has gained traction in states across the country. Black lives and Black wealth matter, which is why Congress must pass our bill without delay,” she urged.
This article was produced and syndicated by Wealth of Geeks.