A Republican-led tax reform bill that includes a proposal to provide a $1,000 investment account to all newborns in taxpayer families through 2028 has been approved by a U.S. House subcommittee.
According to reports by The New York Times and The Wall Street Journal, the House Ways and Means Committee voted 26-19 on May 14 to pass the tax reform package along party lines.
The proposal establishes a federally supported investment account for newborns, officially called the Money Account for Growth and Advancement (MAGA). The account would be created for every child born to families with a Social Security Number from 2025 through the end of 2028.
Tax-Free Contributions and Investment Rules
Under the bill, the federal government would deposit $1,000 into each newborn’s MAGA account, and parents could contribute up to $5,000 annually, with these contributions treated as tax-free.
The MAGA account would operate as a tax-advantaged investment vehicle, allowing both the initial $1,000 and additional deposits to be invested in U.S. stocks, with compound growth similar to a 401(k) retirement account.
Withdrawals from the MAGA account would be restricted until the child turns 18. If the account holder withdraws funds before turning 30, they would be subject to income tax and a 10% penalty.
Support and Criticism
Republican lawmakers stated that the MAGA account offers families tax benefits, while providing children with future resources for education, home purchases, or business startups once they reach adulthood.
The MAGA account originated from the Investing in America Act, introduced by Senator Ted Cruz, and was later included in the broader Republican tax reform bill. In a statement, Senator Cruz said, “Every child will have access to a lifetime compounding personal investment account,” adding that the plan would encourage prosperity and economic participation for Americans.
However, critics have raised concerns about the account’s practicality and uptake, arguing that high inflation and economic uncertainty make long-term investments difficult for many families. Brad Wilcox, director at the center-right think tank Institute of Family Studies, commented, “When a child is born, families need immediate financial support. The newborn investment account does not provide the direct financial relief or daily stability that families require for child-rearing.”
BY HYOUNGJAE KIM [kim.ian@koreadaily.com]
