Five Grand per Baby?

September 29th, 2007 | Posted in » In the News...

So… Hillary wants to give every child born in the U.S. $5000?

Can you say $20,000,000,000 in new taxes?

You’ve gotta be kidding me… we want to tax people so that we can give away money to every child born… so they can use it for whatever?

Now, don’t get me wrong… I’d love a nice handout for all of my kids… it sounds great. But what’s the cost? If the purpose is education (as stated in the article), isn’t there a better way? How about setting aside money for need-based scholarship programs? Oh wait… we already do that…

Here’s some numbers.

In 2006, the U.S. Census estimated there would be 4,000,000 children born (I haven’t tracked down a source for actuals, just these projections).

The census also counted nearly 300,000,000 people (299,398,485, if you believe they can count that accurately).

In 2006, the nonpartisan Tax Foundation estimated that there were 135,660,228 tax returns filed. Of these, 43,362,718 had zero federal tax liability.

So… based on the above, we have 92,297,510 tax-paying households (this excludes those that pay nothing, of course) that will need to provide $20 billion dollars in additional tax money for the government to give $5,000 to 4 million children. That works out to be $216.69 in new tax liability for each household that pays federal taxes. Each year (assuming the program would stay in place, that births don’t change, and that the annual benefit remains the same). $216.69 in new tax liability… almost $20 / month… so we can provide a nice fat check to everyone who has a child?

Talk about your government handouts… in 18 years (when those kids would be able to withdraw it), that $5,000 would be worth quite a bit, even at modest interest rates. At 5%, it would work out to $12,224.11. At higher interest rates, it works out to more, of course… at 7%, it’s $17,460.84… at 9%, $24,926.24. I’m guessing the odds of that money being able to be invested in stocks is pretty slim, though, so you can probably throw the 7% and 9% figures out the window.

Anyway, yes… it sounds very nice… assuming it doesn’t disappear before the child turns 18.

But what’s the purpose? If education, why not a financial aid assistance program (again, we do that already)? How about encouraging families to set aside for their own kids needs? Don’t we already have a child tax credit from which families could set aside funds?

It’s not that hard to accumulate a pretty good chunk of change for your kids’ education, especially assuming you take some of that $1,000 annual tax credit and set it aside.

Over 18 years, even a $20 per month savings plan works out to quite a bit of money. At 5% interest, it’s $6984.04. At 6% interest, it’s $7747.06. Couple that kind of savings with a Pell grant or other federal aid and a bit of hard work on the students’ part (working part-time to pay for school, perhaps?), and suddenly, like magic… kids have a big kick start to help them obtain higher education.

Anyway, you tell me which makes more sense… American tax-paying households paying our federal government an additional $216 annually so we can give $5,000 to every child born in the U.S. today, in hopes they’ll use it for education 18 years down the road… or paying nothing additional annually, educating parents to set aside from existing tax credits for their child’s future, and filling in the gaps from existing federal aid programs?

Of course, what this really boils down to is personal responsibility… are we going to exercise that value or not?

Politicians like Hillary know it’s not a popular message to tell people to look out for their own financial needs… it doesn’t tickle the ears anything like “Uncle Sam is coming to the rescue with… FREE MONEY!” A lot of Americans don’t want to think or hear about it… it’s so much easier to blow our money on whatever we see fit, and then hold out our hands expecting the government to fill them again.

Which brings us back to topic. Hillary wants to give you $5,000 for each child you have. John Stickley would say, set aside some of your own money and teach your kids personal financial responsibility.

Who would you vote for?

*SIGH*