Sen. Cruz Proposes Bill That Would Provide $1K Investment for Every Child at Birth: How Much Would That Be Worth by 18?
Written by
Chris Adam
Edited by
Zuri Anderson
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Some lawmakers want to give every American newborn a seed investment to help prepare them for their financial futures. U.S. Sen. Ted Cruz, a Republican from Texas, introduced his “Invest America Act.”
Since then, the U.S. House of Representatives released its version of the bill in a ways and means committee budget package. Here’s a closer look at what the bill could mean for American families.
The Basics of the Bill
At its core, Cruz’s bill would create private tax-advantaged accounts with a $1,000 seed investment from the federal government for every American child at birth.
“The Invest America Act will trigger fundamental and transformative changes for the financial security and personal freedoms of American citizens for generations,” Cruz said in the statement.
He added every child in America will have private investment accounts that will compound over their lives, enhancing the prosperity and economic participation of the vast majority of Americans.
More Specific Details
Here are some more details about the bill from Cruz:
- Each “Invest America” account will be open to contributions from individuals, family members, friends, and businesses up to $5,000 annually.
- The account investments can be placed in a broad, low-cost fund that tracks the S&P 500, growing tax-deferred until the individual reaches age 18.
- Distributions after age 18 would be taxed at the capital gains rate.
The average account holder would have about $170,000 by the time they turn age 18, according to Cruz and The Dallas Morning News. Of course, that amount would be reached assuming the maximum annual contribution and the historical growth rate at 7%.
According to Fox 26 Houston, based on 2024 numbers, an initial investment from the federal government into the accounts would cost perhaps $3.6 billion dollars. Some critics have been quick to point out the price tag amid growing concerns from Republicans and Democrats over the national deficit.
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