Connecticut is set to become the first US state to offer baby bond trusts in a bid to close the racial wealth gap.
Connecticut is understood to have the highest level of income inequality of any state in the US, an issue that is closely linked with racial inequality.
From July 1 onwards, every child born into poverty will be given a tax-exempt $3,200 bond, which they can access once they turn 18 and must be collected by the time they’re 30.
By their 18th birthday, the sum will amount to almost $11,000, giving each of these young people a helping hand as they enter adult life, the Hartford Courant reports.
The money is intended to be used in certain ways that will benefit the recipient. For example, covering the cost of higher education, buying a house or starting their own business.
Announcing the $600 million baby bond trust earlier this year, State Treasurer Shawn T. Wooden declared the bill would address ‘long-standing economic and race-based wealth disparities by investing directly in children born into poverty to boost Connecticut’s economy.’
One of the most effective ways to narrow the racial wealth gap and break the cycle of poverty is for the State to establish saving accounts that directly invest in children born into poverty.
By taking bold action now, we can change the life trajectories of thousands of Connecticut residents while also enhancing the economic trajectory of our State.
The bonds will receive funding through Connecticut’s 2022-2023 State General Obligation bond package, given approval by the state Senate on June 9. A total of $50 million will be allocated to the baby bonds initiative every year for the next 12 years.
As well as having the highest levels of economic inequality, Connecticut also has significant racial disparities in areas such as education, housing and policing, Connecticut Voices For Children reports.
At the time of writing, 13.3% of children in Connecticut live below the poverty threshold, with the coronavirus pandemic having exacerbated the issue. Out of this figure, 27% of the impoverished children are Black, 29% are Hispanic, and 5% are white.
In 2018, the median Connecticut household brought in a pre-tax income of $76,106, while the median Black household had a pre-tax income of $47,856.
If you have been affected by any of the issues in this article and wish to speak to someone in confidence, contact Stop Hate UK by visiting their website www.stophateuk.org/talk
Topics: News, Connecticut, Now, US, Wealth
CreditsConnecticut State Treasurer and 2 others
Connecticut State Treasurer
BABY BONDS LEGISLATION WILL BREAK GENERATIONAL CYCLES OF POVERTY WHILE BENEFITING CONNECTICUT’S ECONOMY
Connecticut Voices For Children