(New York) On December 2, Texan billionaire Michael Dell shined the spotlight on an initiative buried in the “big and beautiful budget law” promulgated by Donald Trump on July 4: the “Trump accounts”.
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That day, the founder of the eponymous computer hardware company and his wife, Susan, pledged $6.25 billion to this initiative aimed at equipping America’s children with investment accounts. The Dells’ donation aims to ensure that 25 million American children aged 10 or younger living in the poorest 75% of zip codes each receive $250.
This donation will be added to the $1,000 that will be paid from July 4, 2026 by the US Treasury to all American children born between 2025 and 2028 and whose parents have opened one of these “Trump accounts”.
“It’s a significant amount of money,” said Michael Sherraden, co-director of the Center for Social Development at Washington University in St. Louis, of the Dells’ gift, which could inspire other philanthropists. “I was really pleased to see this and I congratulate Michael and Susan Dell. They have good intentions in trying to do something positive with their money. »
Michael Sherraden also makes positive comments about the “Trump accounts”.
PHOTO BRIAN SNYDER, REUTERS ARCHIVES
Businessman Michael Dell and his wife, Susan
“This has never been a partisan idea,” assures the professor emeritus. So it’s not really surprising that Republicans have seized on it. We’re glad they did. We just wish the registration system was a little better designed. »
Reduce wealth inequality
A pioneer in the field, Michael Sherraden published in 1991 Assets and the Poor (The Working and the Poor), a book that inspired American states, including Maine, California and Pennsylvania, to create savings or investment accounts for children. A common goal unites those who were influenced by the main idea of the man who still defines himself today as a social worker: to reduce wealth inequalities, which are greater than income inequalities.
These accounts have produced positive results, notably for black and Hispanic children enrolled in an experiment launched in Oklahoma 18 years ago.
“The overall result is that the children (enrolled in the program) accumulate more money than the children in the control group,” summarizes Michael Sherraden. And there are also a whole series of positive non-economic effects. Parents begin to view their children’s education and potential differently. They begin to adopt better parenting practices. Mothers have a slightly more optimistic view of the future and children have better social and emotional development. »
These results explain why a social worker like Michael Sherraden may welcome the Trump accounts, whose money will be invested in diversified American index funds.
But there is a catch.
Unless there is an eleventh-hour change, enrollment of eligible children in these accounts will not be automatic, as it is today in Oklahoma or Maine. Parents must, from 1er January 2026, complete an Internal Revenue Service (IRS) form to open an account.
Millions of children excluded?
According to Michael Sherraden and other experts, this is a mistake. The Washington University professor in St. Louis points to Maine’s experience as proof, where a philanthropist pledged to give $500 to newborns in the state for their future education if their parents opened investment accounts. Only 40% of them took advantage of the offer. The philanthropist later changed this rule.
If registration is not automatic, the Trump administration will exclude millions of children, who will likely come from the poorest families.
Michael Sherraden, co-director of the Center for Social Development at Washington University
“IRS management and staff agree with us on this, as does Republican Senator Ted Cruz. But it seems that the information does not reach the president,” laments Michael Sherraden.
This is not the only element of the initiative that presents a problem in the eyes of experts. Parents, philanthropists or other donors will be able to contribute up to $5,000 per year to a Trump account, but this money will not be tax deductible.
And when beneficiaries turn 18 and can finally access these funds, withdrawals will be taxed, unlike funds invested in other savings vehicles, including 529 plans designed to cover future education expenses.
But the registration issue is the one most likely to undermine Donald Trump’s good idea, according to Michael Sherraden.
“We have very clear data on this subject. As currently designed, this policy will generate more wealth inequality. There’s really no doubt about it. This is what is so frustrating as a social scientist. »
