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Friday, May 24, 2013

Senate Releases Tax Reform Option Paper on Economic Security

Senate LogoThe Senate Finance Committee yesterday released its Seventh Tax Reform Option Paper on Economic Security:

This document is the seventh in a series of papers compiling tax reform options that Finance Committee members may wish to consider as they work towards reforming our nation’s tax system. This compilation is a joint product of the majority and minority staffs of the Finance Committee with input from Committee members’ staffs. ..

The paper ...  outlines the following potential goals for reform in this policy area:

  • Minimize the disruption to business practices and employee expectations inherent in any fundamental tax reform;
  • Simplify the taxation of retirement savings and health insurance; 
  • Increase the number of people with enough resources for an adequate standard of living in retirement, and expand access to health insurance; 
  • Maximize the bang-for-the-buck of any tax incentives that are retained or reformed; and
  • Develop neutral rules regarding compensation and fringe benefits to ensure that business needs and not tax planning drive compensation decisions, while minimizing compliance costs.

 
The paper lists and expounds upon the following broad policy reform options:

  • Limit or eliminate tax preferences for retirement saving;
  • Replace deductions, exclusions and credits for retirement savings with a single refundable tax credit;
  • Increase retirement savings incentives;
  • Attempt to increase effect of tax expenditures for retirement savings on retirement security;
  • Simplify process of selecting and administering a plan for employers;
  • Establish new plan options for employers;
  • Reduce “leakage” from retirement plans;
  • Allow more flexibility in distributions from retirement savings accounts;
  • Reduce tax expenditures for employer-provided health benefits;
  • Modify the Affordable Care Act (ACA);
  • Expand the tax benefits for health;
  • Expand long-term care benefits;
  • Reform excise taxes and other tax provisions that may affect health;
  • Reduce tax expenditures for life insurance products;
  • Reduce tax expenditures for annuities;
  • Limit exclusions for other employee fringe benefits;
  • Expand tax preferences for other employee fringe benefits;
  • Harmonize employee fringe benefit rules;
  • Revise the limits on the deductibility of executive compensation;
  • Revise the rules related to non-qualified deferred compensation;
  • Revise the rules related to equity-based compensation; and
  • Revise the rules related to golden parachute payments to executives upon a change in control.

http://taxprof.typepad.com/taxprof_blog/2013/05/senate-releases-1.html

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