Wealth inequality starts at birth. Lawmakers debate whether child savings accounts can help

Urbazon | E+ | Getty Images— would create savings accounts for all newborns. Low- and moderate- income families would receive federal contributions if their modified adjusted gross incomes fallsup to $53,000

However, implementing a federal program may come with significant costs to taxpayers, said Sen. Mike Crapo, R-Idaho, who is the ranking member on the committee. The money doesn't just help improve financial preparedness for college, he said. It has also been shown to help children's early social emotional development, math and reading scores and increase the likelihood they will eventually enroll in college.In Maine, the Alfond Scholarship Foundation has provided all babies born in the state with a $500 grant towards either college or future training.

The total invested — about $344 million — grew to $477 million in the market as of the end of April, according to Quint. "In this case, checks from the government fueled more inflation than they did wealth building," he said.Reforming the tax code can help prevent double taxation on wages when they are earned, as well as interest that accumulates on saving, Michel said. While that disincentive has been reduced for 401s and 529 plans, they still come with restrictions on how the money may be used that may discourage low- and middle-income individuals from using them.

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