President Donald Trump's plan to debut Trump Accounts is a test that could likely disappoint, The Atlantic reported on Thursday.
Michael and Susan Dell announced last week that they would give $6.25 billion to millions of American children, adding $250 for each government-run savings account. The idea sets up potential retirement accounts for kids, which sounds great in theory, but could prove not as generous as it's been touted.
"President Donald Trump and his supporters are billing Trump Accounts as a vehicle to set the next generation 'on a course for prosperity' and transform the lives of low-income and working-class people. In reality, the program is an interesting yet modest experiment in giving American children a stake in the stock market. Trump Accounts, in other words, are perfectly Trumpian down to the name, in that they deliver a lot of sizzle but not much steak," The Atlantic reported.
Contributions to these accounts are not actually tax-deductible. And although the money can't be touched by children until they turn 18, once they do, that money can be taxed.
"Trump hails these accounts as a way to 'help millions of Americans harness the strength of our economy to lift up the next generation,'" The Atlantic reported. "In reality, the impact of these accounts on the lives of most American kids will likely be trivial. There’s nothing wrong with the idea of Trump Accounts, which is presumably why Dell has admirably decided to contribute billions to expand them. But the way they’re being sold will end up leaving people disappointed."
People might need something different, despite the Dells and administration's decisions.
"The principle that the government should give low- and middle-income people a way of benefiting from the enormous returns on capital that American businesses make is a good one," according to The Atlantic. "But a more serious initiative would have involved rolling government contributions for low-income children, and would have made contributions to the accounts of low- and middle-income kids tax-deductible. That might have helped kids who need a nest egg actually build one. But the president does not, in fact, seem all that interested in narrowing the wealth gap. For Trump, a product just needs to look the part for him to give it his name."