If you think Washington’s struggle with the fiscal cliff back in December and the sequester brouhaha in recent weeks has derailed efforts on Capitol Hill to tackle tax reform, think again.
That’s the message Brian Graff delivered to 1,400 advisers and retirement industry insiders yesterday at the kickoff session of the NAPA/ASPPA 401(k) Summit. Despite three more looming crises related to government funding – expiration of the fiscal cliff’s extension of federal funding on March 27, an agreement that both houses of Congress will introduce budget measures by April 15, and the expiration of the temporary extension of the debt ceiling at the end of May – “the tax committees on the Hill are hell-bent on doing tax reform,” said Graff, executive director/CEO of NAPA and ASPPA.
Rep. Dave Camp (R-MI), Chairman of the House Ways and Means Committee, has appointed working groups to study various possibilities for proceeding with comprehensive tax reform legislation. The working group studying the tax incentives for retirement savings, including employer-sponsored plans, includes Reps. Pat Tiberi (R-OH) and Ron Kind (D-WI).
Camp’s goal, Graff said, is to introduce a measure in July – in fact, the “HR-1” designation, typically assigned to an important bill, is being reserved for a tax reform bill. The overall goal: to broaden the tax base and reduce tax rates. Likely it will include a package of provisions limiting deductions and raising revenue. The question, Graff noted, is where retirement plans will fit in all that – especially in the context of raising revenue.
For many members of Congress, says Graff, tax reform is not a public policy issue – it’s a revenue issue. “They’re just looking for money,” he asserts. “Unfortunately, [the retirement industry] has been a piggy bank for a long time.” As an example, Graff cites a provision in the president’s budget that proposes a 28% cap on DC plan deferrals – an idea endorsed by the Brookings Institution last week – which would result in double taxation.
