NorCo Council Member Jason Boulette: Trump Accounts Have Their Pitfalls

One of my takeaways from President Donald Trump's Tuesday night SOTU was my praise for Trump accounts, a special kind of IRA that can be set up for children. Uncles Sam will contribute $1,000 to accounts for babies born between 2025 and 2028, with the program officially launching on July 4, 2026, to coincide with the 250th anniversary of U.S. independence. The funds must be invested in low-fee index funds that primarily hold U.S. stocks. Now as anyone who has seen my estate knows, I'm no financial expert. But I'm thinking $1,000 is $1,000. Unlike me, NorCo Council member Jason Boulette actually is a financial expert. And while he agrees that those who can take the money should do so, he pretty much thinks that's all you should do. He has given me permission to share his analysis with the "disclaimer that the information is intended for educational purposes and does not constitute investment, legal, or tax advice.

When you choose to invest, there are a lot of different account options under the tax code. You want to choose the one that will yield the greatest benefits for yourself and your child. And in that regard, Trump accounts are simply, mathematically, worse than just about any other option.

First, look at the Trump accounts' treatment in the tax code against IRAs. There are two main types of IRAs, traditional and Roth. Traditional IRAs are tax-deferred, meaning you get a tax deduction for contributing (the pro), but you'll later pay income tax on withdrawals including on all gains (the con). With Roth IRAs, your contributions are with after-tax dollars, meaning you've already paid income tax on the money that goes in and get no deductions for contributing (the con), but on the other hand your earnings grow tax-free and you pay no tax at all on withdrawals (the pro). With Trump accounts, you contribute post-tax dollars like a Roth, but your child will need to pay income tax on all the earnings, like a traditional. It combines the cons of both IRA structures with neither of the pros.

When your child turns 18, it converts into a traditional IRA that you got no deductions for. Note that because it converts into a traditional IRA, there's a 10% penalty for withdrawals pre-retirement from Trump accounts that don't meet special exceptions like education or buying a first-time home.

Now, compare Trump accounts to alternatives you could use to invest for your child:

• Coverdell IRAs: these allow you to invest for educational expenses. Coverdells have a $2,000 annual contribution limit vs Trump's $5,000 annual limit; they also have an income restriction of $220,000 for a married couple. Coverdells are not tax deductible, however unlike with Trump accounts, withdrawals (including on gains) are tax-free if used for educational expenses.
• 529s: on the whole, a MUCH better investment choice. Again, these are primarily to save for educational expenses, but the definition is pretty broad (they can be used for room & board, for example). Contribution limits are much higher for 529s: in 2026, the limit is $19,000, whereas for Trumps, it's $5,000. While 529s don't allow for federal tax deductions, they allow for state income tax deductions in almost every state. Here in Pennsylvania, that'll get you a deduction on our flat 6% income tax. Qualified 529 withdrawals are tax free. If your child is withdrawing from a Trump account for educational expenses, they're paying income tax on all the gains. If they're withdrawing from a 529 for educational expenses, they're paying no tax on any gains. The one edge I'd give to Trump accounts over 529s is that while both can be converted to IRAs, there appears to be no cap on the Trump conversions whereas there's a $35,000 lifetime cap per child for 529 to IRA conversions. However, the 529 can be rolled over to a Roth IRA as opposed to a traditional for a Trump account -- that's $35,000 your child will never pay taxes on.
• UGMA/UTMA: these are custodial accounts that are managed by the guardian, but the money invested into them belongs to the child. You can contribute up to $19,000 in these annually without triggering gift taxes. Again, no tax deductions for contributions. Unlike 529s and Coverdells, they do not grow tax-deferred. However, up to $1,350 of interest/dividend growth annually will be tax free (standard deduction), and $1,351-2,700 of growth will be taxed at the child's tax rate of 10%. Your child will be able withdraw the money in the UGMA/UTMA without paying a tax penalty pre-retirement. I've run simulations and have looked at other investors' simulations that show that even though this is a taxable account, your child will end up ahead here, because long-term holdings will be taxed as long term capital gains, and Trump account gains will be taxed as income.
• Roth IRA: when your child is old enough to get a job with earned income, help them set up a Roth IRA and contribute the annual maximum to that. The Trump account will, at age 18, convert to a traditional IRA. Your child can roll over money from his traditional to his Roth IRA, but depending on when it's done, it could be subject to Kiddie Tax rules (which means up to age 24, your child could pay YOUR income tax rate for any conversions). If you funded an UGMA/UTMA for your child, once they become an adult and get the money, they can use that to fund their Roth in future working years. With the Trump account (like a traditional IRA), you pay a 10% penalty (on top of the income taxes) for any money withdrawn for a reason other than education/buying a first time home. With a Roth, your child can withdraw any of the contributions (as opposed to the gains) without paying any tax penalty.
• Just invest in a traditional taxable brokerage account that your child will inherit when you die. The con here is you'll be dead when your child gets it (or, again, you can give up to $19,000 annually without triggering gift taxes), but they won't get the bulk of the Trump account money until they're retired. The pro is that thanks to stepped up basis, they'll get a massive tax advantage with this money. Again, like with the UGMA/UTMA, run a simulation where you invest the same amount in a taxable brokerage and a Trump account, and the end result is the taxable brokerage account will end up with a lot more money.

The bottom line is that an account where you're contributing after tax money, but the gains are taxed as income and not long term capital gains (or tax free) is much worse than just about every other option. Again, like I said, everyone whose child is eligible should take the $1,000 federal contribution. But when it comes to investing your own money, you should prioritize all these other accounts over a Trump account.

Another plug for 529s: here in Pennsylvania, our former Treasurer, Joe Torsella, started a program, Keystone Scholars, where every child born in the state gets $100 from the state in their 529 (the legislature later made this $100 permanent; with Trump accounts, the free $1,000 goes away at the end of 2028). If you contribute further to the 529, you get a tax deduction. And your child will not pay taxes on any of that money or the growth in the account. 

Takeaways From Trump's Longest-Ever SOTU

I made it through President Donald Trump's SOTU last night. I need more time to consider what he had to say, but I'll share my takeaways and welcome yours. 

First, it was too long. Trump shattered the record for longest SOTU, a record that he himself set last year. As a result, it was boring at times.

Second, Democrats who opted to boycott the speech are childish and guilty of the very partisan behavior that Trump himself exhibited during his address. Like it or not, he is the President. I do not respect the person but do respect the office. 

Third, most of Trump's partisan rants at Democrats are just as childish. At a time when we need to be talking to each other, we tend to talk at each other. 

Fourth, his call to end insider trading was one of the few instances that resulted in bipartisan applause, but it's unclear to me whether Congress will act.

Fifth, the Trump accounts for kids (he claims he did not come up with the name), which will be seeded with $1,000 from the federal government, is an excellent idea and a way to help our children build a nest egg they can collect when they turn 18. He also deserves credit for eliminating taxes on tips (up to a point) and on overtime. 

Sixth, his claim that tariffs could result in the elimination of income tax is sheer nonsense and would be regressive, hurting the poor. 

Seventh, his claim to have stopped illegal immigration appears to be accurate.

Eighth, his claim that the economy is doing well is one with which most Americans disagree. 

Ninth, his foreign policy is simply chaotic, but he avoided addressing many of the problems he himself has created, like alienating most of our allies. 

Instead of Sending a Hospital Boat to Greenland, Why Not Here?

Last week, President Donald Trump announced a hospital ship was "on its way" to Greenland "to take care of the many people who are sick, and not being taken care of there.” In doing so, what Trump actually did is demonstrate yet again that he is completely out of touch with our healthcare system, which is essentially unavailable to all but the very rich or the very poor.  

In Greenland, unlike here in the United States, healthcare is free. So is college. So the people who live there have to be amused by Trump's latest Greenland gambit. 

By the way, nobody in the federal government has a clue that any hospital ship is on its way anywhere.

If Trump really wanted to help "the many people who are sick and not being taken care of," he could send it here. After all, he likes to chant "America First." 

Dixie TIF Makes Housing Less Affordable, Is Not Needed

Last year, NorCo Council denied a tax break known as a TIF to Skyline Enterprises, the developer of plan to convert the vacant Wilson Borough Dixie Cup factory into 405 luxury apartments. The TIF would enable Skyline to float a bond to pay for the cost of construction, payable from future increases in assessment. But as I told you yesterday, Skyline plans to try again in March. 

Skyline was at a NorCo Council committee meeting last week to seek County Council's approval of its application for a $500,000 state RACP grant. "You're doing a fantastic job!" gushed Council member Jeff Warren to Skyline managing partner Brian Bartee. He noted that Bartee has spent his own money to prepare the site. That's a bit misleading. Bartee has or will be receiving at least $1,383,257 from the state alone, to say nothing of the TIF and federal tax credits. 

Warren also claimed that the Lehigh Valley needs 10,000 housing units and "This is needed to make housing more attainable." This is the same argument that former Exec Lamont McClure made. They are both wrong. This will actually make housing less attainable. Let me explain why. 

If the Lehigh Valley were a bubble into which no one could move and no one could leave, 405 luxury apartment units would make housing more attainable. But as we all know, the Lehigh Valley is no bubble into which no one can move or leave. The addition of 405 luxury apartments will only attract people from outside of the Lehigh Valley who can afford to pay the high rent as they commute to their jobs in NYC or Jersey. And guess what? The Lehigh Valley will still need 10,000 housing units. 

If Skyline was building workforce housing, this would probably alleviate the housing crisis. But it's not. It is building luxury apartments and a luxury hotel, not a place for a weary corrections officer to rest between shifts. 

In reality, this will exacerbate the housing crisis. When nearby landlords see the rents being charged by Skyline, they will increase their monthly rents as well, making housing less affordable. During the hearings in advance of the TIF that failed last year, a well-known local landlord argued in favor of the TIF for the obvious reason that he could then charge higher monthly rents. 

In addition to actually exacerbating our housing crisis, Skyline does not really need a TIF from the county. Council member Jason Boulette queried Bartee on that topic. "It really means a lot to us to have the county support and buy-in as well." answered Bartee. But when pressed he acknowledged that "[t]here are other ways to have the project move forward." 

Given that this project will actually worsen the housing crisis and can move ahead without shackling the county taxpayer, there is no need for the county to give this nonlocal developer any tax break. The county is looking down the barrel of a tax hike next year for Gracedale and better wages and should probably think twice before investing taxpayers' hard-earned money into this boondoggle. 

Skyline Gets NorCo Council to Support $500,000 State Grant For Luxury Hotel in Wilson Boro, Next to Dixie Cup

Local governments Wilson Borough and Wilson Area School District have been falling all over themselves to help the for-profit private equity firm (Skyline Investment Group) build both luxury apartments and a high-end hotel in Wilson Borough. In addition to seeking a $29 million tax break to redevelop the vacant Dixie Cup factory, it already has received $838,257 in state grants. At Thursday night's meeting, Northampton County Council endorsed another $500,000 in state RACP grants. Skyline still another $9 million from the state. Without the local tax break known as a TIF, which amounts to about $29 million, it is seeking $124,338.257 in the form of outright grants or tax credits. 

Skyline principal Brian Bartee was introduced by DCED Director Tina Smith, who told Council that the Zrinski administration supports this project. But what exactly is the project? 

We all know that Skyline wants a $29 million TIF to turn Wilson Borough's vacant Dixie Cup factory, into luxury apartments that few can afford. That proposal failed last year. But with a new County Council, Bartee plans to get the county to join the borough and school district in awarding his project a TIF and apparently plans to seek county approval again sometime next month. 

But does County Council even know there's much more? There was little discussion during the meeting as Council members told each other they were merely voting on a "pass through" grant. It's still the public's money, but Council member Lori Vargo Heffner was the sole NO vote. 

Here's what County Council does not know but could have discovered if they looked at the actual application. It includes more than the Dixie Cup. It also includes what Skyline calls its "New Life," project, a plan to convert the 3-acre former LA Fitness site into a "premier hotel" known as The Wilson. According to Skyline, "130 hotel suites with 250 multifamily residences are planned that will feature 1920s-inspired art elegantly paired with modern amenities and exceptional service. Along with the introduction of approximately 163 permanent jobs, The Wilson will feature EV charging stations, a high staff-to-room ratio, and a suite of premium services.

Guests will enjoy the personalized attention of a dedicated butler, doorman, concierge, chauffeur, and valet parking, all provided by a team of highly trained professionals committed to the highest standards of hospitality".

Do you think it's wise to spend public tax dollars for luxury apartments and a premier hotel that includes butlers and chauffeurs? 

The grant application describes the site as a "brownfield," but that is completely untrue of the LA Fitness site.  

Skyline has already been awarded $500,000 from an RACP application in 2024. It also received $163,257 from a DCED Multimodal Transportation Funding Grant and a $175,000 Greenways, Trails and Recreational Program grant. It is seeking even more grant money from PennDOT, DCED Mixed Use Housing Development, another DCED Greenways grant, another DCED multimodal transportation grant, and Pa Historic tax credits

It also wants $28.5 million in federal tax equity credits.

 

Dixie Cup Rcap Application 2025 by BernieOHare

LC Exec Josh Siegel Wants to Expand His Office at Expense of Cedarbrook and Jail

Lehigh County Executive Josh Siegel wants to expansion his office at the expense of Cedarbrook (Lehigh County's nursing home) and the jail. 

He wants to add four positions "to strengthen leadership capacity, enhance communications, and improve intergovernmental coordination while maintaining overall fiscal responsibility." These four positions are a multimedia specialist, a communications manager, a chief of staff and a community and intergovernmental liaison. His supporting memo claims these will cost $386,566, although it's unclear to me whether this figure is just salary or salary plus benefits. 

He will pay for these positions by eliminating eight existing positions at Cedarbrook and the county jail. These are 2 LPNs, 3 CNAs, 2 corrections officers and 1 treatment case manager. who are budgeted at $417,656, including salary and benefits. These positions are currently unfilled. 

This will save taxpayers $31,100, but is it really in the best interests of Lehigh County to eliminate positions that take care of our elderly and who protect us from people the courts have decided to confine behind bars?

Commissioner Ron Beitler noted that the Chief of Staff position was actually eliminated in 2014 because it was considered both an unnecessary cost and too political in nature. 

Beitler opposes Siegel's changes. "In passing former Executive Armstrong's 2026 budget, our Board of Commissioners paid for Nurses, Caseworkers and Corrections Officers, not a Chief of Staff to do the Executive's job or a Multimedia Specialist to create County TikTok videos," he said.

Siegel's proposal requires at least one Commissioner sponsor before it can be considered by the Board. But he's already filled two of the positions at least temporarily. He's hired Hillary Kleinz, his long-time campaign manager, as his $92,000 Chief of Staff. And Dan Sheehan, a former reporter with both The Morning Call and Express Times, is his pick for communications. 

Siegel responded to Beitler's concerns by calling him a "partisan obstructionist" though Beitler is actually registered Independent. He told WFMZ-TV69 that previous Lehigh County administrations (Phil Armstrong, Tom Muller, Don Cunningham) "were caretaker administrations that had no energy, no ideas, no vision for the county."

He hopes all nine Commissioners support his power grab. He'll find out Wednesday.

NorCo Council Approves Budget Amendment Allocating $7 Million in County Funds to Gracedale

At last night's meeting of Northampton County Council, all nine members voted for a Budget Amendment that allocates $7 million from the county to Gracedale. 

In a message to Council, Executive Tara Zrinski explained that the county transfer was needed so that the nursing home's 2025 expenditures are covered. 

"We carefully reviewed each departmental budget to identify unspent funds, including savings from vacancies, deferred purchases and other unused allocations, and we're able to reallocate approximately 7 million to fully cover Graysdale's 2025 expenditures."

"The remaining deficit reflects timing differences between when expenses are incurred and when reimbursements are received."

"Approving these amendments will allow us to balance the 2025 budget as required by law and fulfill our shared responsibility for sound fiscal management.

NorCo's Former Custody Master Appeals Dismissal of Her Civil Rights Case Against the Court

Earlier this month, Federal District Court Judge John Gallagher dismissed a civil rights action brought by NorCo's former custody master, Lisa Tresslar, against the Northampton County bench. She claimed she was the victim of retaliation when he objected to changes in custody guidelines promulgated by the court. According to Judge Gallagher, no jury could reasonably conclude that her objections were made in her capacity as a private citizen. She also failed to establish that the court even knew of her more public complaints. Judge Gallagher's dismissal was "with prejudice," meaning that Tresslar was unable to amend her claim.

Tresslar has appealed judge Gallagher's decision to the Third Circuit Court of Appeals, which is the second highest court in the nation. Her Notice was filed yesterday.