ERIC recently joined a group of business trade associations on a letter to the Senate regarding the “blank slate” approach to tax reform, urging the lawmakers to preserve the current tax treatment related to retirement savings.
“While we work to enhance the current [employer-sponsored retirement] system and reduce the deficit, we must not eliminate one of the central foundations – the tax treatment of retirement savings – upon which today’s successful system is built,” the letter argues. It adds that, “The effects of such a change for individuals, employers and the system as a whole are simply too harmful and must be avoided.”
The letter cites the following key points as reasons to preserve the current tax treatment for retirement savings:
- Employer-provided plans are a key component to our nation’s retirement system;
- Changing the tax treatment and/or lowering contribution levels will result in lower retirement savings and fewer workers being offered retirement plans by their employers;
- Employer-provided retirement plans offer key advantages to workers;
- The current legislative structure of retirement tax incentives reflects the complexity and variability of the U.S. workforce;
- Retirement plans play an important role in the capital markets; and
- Taxes on retirement savings are deferred, not excluded.
As we’ve previously reported, Senate Finance Committee Chairman Max Baucus (D-MT) and Ranking Member Orrin Hatch (R-UT) recently sent a letter to their Senate colleagues asking for ideas and proposals on what specific tax provisions should be preserved as part of a broad overhaul. Baucus and Hatch explained that they were approaching tax reform from a “blank slate” and plan to operate from an assumption that all special tax provisions are out unless they help grow the economy, make the tax code fairer, or effectively promote important policy objectives.
Baucus, along with his House counterpart, Ways and Means Committee Chairman Dave Camp (R-MI), have said that their two committees will separately “mark up” tax reform legislation sometime this fall.
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