When Republicans first rolled out a proposal last week to invest $1,000 on behalf of every American baby born over the next four years, they were not exactly subtle about whom the public should credit for the cash.
The original draft called for the funds to be put into new a “money account for growth and advancement,” or, as the bill suggested they be called, a “MAGA account.”
Apparently, though, endowing the accounts with the name of President Trump’s political movement was not clear enough. As part of a series of last-minute changes House Republicans made to their broad fiscal package Wednesday night, they decided to just cut to the chase. The money would now be deposited in a “Trump account.”
Under the bill, children born between Jan., 1, 2025, and Jan. 1, 2029, would receive the money, which would be invested on their behalf in financial markets. Once they had grown up, they could withdraw the proceeds to pay for certain expenses, including going to college or buying a house. The child’s parents, or other third parties, could also contribute to the account.
While the benefit of the $1,000 initial investment from the government is clear, the accounts have otherwise puzzled tax experts. People could only contribute post-tax income to the accounts, and gains in the accounts would also be taxed when money was withdrawn. That would appear to make the “Trump account” function much like a typical investment account, rather than a tax-advantaged account like an individual retirement account or a health savings account.
Andrew Duehren covers tax policy for The Times from Washington.
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