Budget Proposal Includes Deferrals with Deductions and Exclusions
ARLINGTON, VA, (July 20, 2011) – The following is a statement from Brian H. Graff, executive director and CEO of The American Society of Pension Professionals & Actuaries (ASPPA) in response to the proposal by a bipartisan coalition of senators known as the “Gang of Six.”
We applaud Congressional attempts to reduce the deficit, lift the debt ceiling, and balance the budget in a way that secures our nation’s future. However, including retirement savings tax deferrals in the same category as permanent deductions and exclusions may put American workers retirement security in jeopardy and not reduce the long-term deficit as expected because the proposal relies on inflated numbers.
The Gang of Six proposal would raise $1 trillion in revenue by reducing tax incentives, including those for retirement savings. We are very concerned that the proposal lumps retirement savings incentives, which are tax deferrals not exclusions, into the same pot as other incentives classified as tax expenditures. In reality, traditional retirement savings tax incentives don’t eliminate income tax on retirement savings, they defer payment of income tax until workers retire and benefits are paid out. The cost of the incentives is overstated because most of the deferred taxes will be paid after the short-term window used in Washington’s budget scoring . Failure to recognize this bad budget math could decimate savings rates where Americans save most—at work. (ASPPA Tax Expenditure Study—May 2011)
We urge Congress to tread carefully. Raising short-term revenues by reducing the tax deferral incentives created to provide retirement security for millions of American workers and retirees is not in the long-term interest of American workers or their children.”
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About ASPPA: The American Society of Pension Professionals & Actuaries (ASPPA) is a national organization of more than 7,500 retirement plan and benefits professionals that serves as the educator, voice, and advocate for the employer-based retirement system. ASPPA members are administrators, actuaries, advisors, attorneys, accountants, and other financial services professionals who provide consulting and administrative services for qualified retirement plans. www.asppa.org
Category: Washington Update