There have been a variety of ideas on how to close the gap between the “haves” and the “have nots” in this country. One of the latest is baby bonds, which is basically a taxpayer-funded trust fund for children. Is this a great way to break the cycle of poverty, or just another transfer of wealth?
Here are Five Fast Facts on Washington State’s proposed baby bonds:
- 💰 What’s The Point? The purpose of the program is to help poor families (especially minorities) get future financial assistance. It would create a pool of money for every kid born in the state to be used when they become an adult for things like homeownership, education, or starting a small business. What happens if they don’t do any of those things? Do taxpayers get a refund??
- 🏫 Where Did It Come From? The idea comes from a couple economics professors, and it’s getting traction in several states around the country. If pushed through, Washington would be the first to formally sign it into law. These things always start with professors, don’t they?
- 🏦🏧 What Are The Details? Starting in 2024, a minimum of $4k is carved out of tax revenues for every kid born in the state and socked away until they’re at least 18 years old. They can only draw those funds out when they’re old enough and can demonstrate financial need. Maturity is not part of the criteria.
- 💸 What Are The Numbers? There are about 40k kids born every year, so it would cost taxpayers about $150M annually. The piper is about to get richer!
- 👩🏻👩🏽👩🏿 Who Will It Help Most? It’s not explicitly intended for minorities, but they will be helped the most. Minority households in the Evergreen State are 1.5 times more likely to have zero or negative net worth than white households.
🔥Bottom line: Look, we get it. A lot of folks just need a little help and then they can do great things. But is this really the right way to go about addressing poverty? It definitely helps the Paychecks of those few who get the money, but that’s only because everyone else in the state is getting smaller Paychecks to do it. At minimum, it raises some questions, and there needs to be a hearty debate about it!
What do you think about baby bonds?
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