Economic Security Report Highlights Tax Reform Recommendations

Recently, the finance committee issued a sequence of reportsexplaining the proposed tax reform laws. The Economic Security report statesthe different goals that could be reached by changing the tax laws in lifeinsurance, retirement, healthcare benefits, annuities, executive salaries, andfringe benefits. This report indicated that each of these topics would belooked at more closely during the tax reform debate. Additionally, the reportexplains the recommended reform proposals that might be included in futurelaws. Moreover, the report emphasizes the current tax systems intricacies andcompeting objectives.

Some of the retirement income proposals range fromlimiting or getting rid of all favorable deductions for retirement savings. Thereport further suggests that we replace all deductions with a unified taxcredit that acts as a government- funded matching retirement plan. The mainhealthcare proposal is to revoke the tax exclusion for employer –providedhealthcare and prohibit new contributions to health savings accounts orflexible savings accounts. Although some say it is unlikely that there will bea comprehensive tax reform, it is more likely that there will be an increase intaxes. There are many different tax reform proposals that will likely result ingradual changes in legislation. 

See Jeffrey Capwell and G. William Tysse, Senate Finance Committee Staff Report Suggests Changes in Tax Treatment of Employee Benefits, Mcguire Woods, May 30, 2013.