On Tuesday, July 24, the Aspen Institute’s Initiative on Financial Security organized a briefing for congressional staff to discuss how reforming the tax code could affect the retirement security of Americans. The briefing featured remarks from two key members of the House Ways & Means Committee, which has jurisdiction over reforming the tax code, Congressman Erik Paulsen (R-MN, 3rd) and Congressman Richard Neal (D-MA, 1st), as well as five panel participants, including ASPPA & NAPA CEO/Executive Director Brian Graff.
Graff made a strong case that the workplace retirement plan system works for middle-class Americans, noting that workers earning $30,000 to $50,000 per year are 14 times more likely to save at work than on their own. He also emphasized that the tax incentive for retirement savings is a deferral, not a permanent exclusion. Failure to account for this deferred tax revenue, he argued, overstates the retirement tax expenditure estimate by more than 50%.
Congressman Paulsen expressed serious concern about the retirement cap proposal contained in President Obama’s budget for fiscal year 2014. He reiterated his support for reforms of the tax code that increase incentives for savings, investment, and economic growth. Congressman Neal argued that maintaining the tax incentives for the employer is a key factor to get rank and file employees to save, and that a soft requirement for employers to implement a payroll deduction savings arrangement for employees would seriously address the current retirement plan coverage gap.
Other speakers, including: Douglas Holtz-Eakin, President of the American Action Forum; Christine Marcks, President of Prudential Retirement; Aliya Wong, Executive Director of Retirement Policy for the U.S. Chamber of Commerce; and Lisa Mensah, Founder & Director of the Aspen Institute on Financial Security all struck a similar general theme. The message conveyed to policymakers and staff was that Congress must "do no harm" if it reforms the tax code, but there are sensible changes to the tax code that could make the system better.
