Savings Account for children in tax bill

[JimmySpeaks]

3 hours ago, red viking said:

Not sure where you get that figure, but the benefit they provide through cheap labor (and a young work force) is much more than that. 

Please feel free to prove how the benefit is much more than that. We’ll all wait patiently 

[Offthemat]

Some of them make some spicy sausage, but I can't find my cat. 

[WrestlingRasta]

11 hours ago, red viking said:

Not sure where you get that figure, but the benefit they provide through cheap labor (and a young work force) is much more than that. 

So….where did you come up with your number, that you’re sure beats a number you don’t known where it came from?

[red viking]

8 hours ago, JimmySpeaks said:

Please feel free to prove how the benefit is much more than that. We’ll all wait patiently 

PhD economists

[Offthemat]

1 hour ago, red viking said:

PhD economists

?  Efficient Post hole Diggers?

[JimmySpeaks]

11 hours ago, red viking said:

PhD economists

That’s what I thought.  More of your smoke blowing. 

[TylerDurden]

Back to the topic.

This idea isn't all that bad - aside from the fact it's assuredly not paid for by anything in the bill and would simply add to the annual deficit and the long term debt. But I'm pretty sure we only care about that sort of thing when your favorite political party isn't in power, so we'll just skip over that for now. 

These sort of custodial accounts already exist (in a more tax-advantaged form) - I have them for my kid. One difference is that I wasn't given seed money for it. They certainly aren't going to grow enough from $1,000 (if you don't/can't invest more) to pay for college, but I wouldn't turn it down simply because it won't cover the entire cost of something. Simple estimates show that you might end up with a little less than a $6,000 return if you average 10% return on the original investment. 

The devil is in the details, of course, and this particular item has a 5-year window for children born from December 31, 2024 - January 1, 2029. Interpret that timeline as you like. There's also a $5,000 annual contribution limit and 18 is the age of maturity, with a mandatory payout at 31. It also appears that there is not up-front deduction like you'd see from a 529.

Those details tell me that this isn't likely to have a huge impact on the people who would need it the most, but gives another tax-preferred vehicle (even if it has fewer tax benefits) for folks who would already be able to fund the similar accounts that already exist, but gives them $1,000 to have a baby. 

I don't hate it, but it's largely political theater. 

[ionel]

9 minutes ago, TylerDurden said:

Back to the topic.

This idea isn't all that bad - aside from the fact it's assuredly not paid for by anything in the bill and would simply add to the annual deficit and the long term debt. But I'm pretty sure we only care about that sort of thing when your favorite political party isn't in power, so we'll just skip over that for now. 

These sort of custodial accounts already exist (in a more tax-advantaged form) - I have them for my kid. One difference is that I wasn't given seed money for it. They certainly aren't going to grow enough from $1,000 (if you don't/can't invest more) to pay for college, but I wouldn't turn it down simply because it won't cover the entire cost of something. Simple estimates show that you might end up with a little less than a $6,000 return if you average 10% return on the original investment. 

The devil is in the details, of course, and this particular item has a 5-year window for children born from December 31, 2024 - January 1, 2029. Interpret that timeline as you like. There's also a $5,000 annual contribution limit and 18 is the age of maturity, with a mandatory payout at 31. It also appears that there is not up-front deduction like you'd see from a 529.

Those details tell me that this isn't likely to have a huge impact on the people who would need it the most, but gives another tax-preferred vehicle (even if it has fewer tax benefits) for folks who would already be able to fund the similar accounts that already exist, but gives them $1,000 to have a baby. 

I don't hate it, but it's largely political theater. 

But which would you rather have, this or an extra $1,000 tax deduction for kids born 25 thru 28? 

[TylerDurden]

4 minutes ago, ionel said:

But which would you rather have, this or an extra $1,000 tax deduction for kids born 25 thru 28? 

If I were a person who was having a child in the next four years, I'd rather have this. 

I'm actually all for Freakonomics-adjacent incentives - though I don't think we need to incentivize having babies and I'm not sure this is enough of an incentive to the end, regardless. I know it wouldn't be for me. 

[ionel]

1 hour ago, TylerDurden said:

If I were a person who was having a child in the next four years, I'd rather have this. 

I'm actually all for Freakonomics-adjacent incentives - though I don't think we need to incentivize having babies and I'm not sure this is enough of an incentive to the end, regardless. I know it wouldn't be for me. 

I'd agree think it's better than tax deduction, get some new parents started that might not know otherwise how to start a plan.  It really doesnt take as much as some folks think.  My kids could've gone to CC in county for basically free then pathway into very good 4 year after 2 years, 4 yr degree for cost of 2.  But they chose a different path.