TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Friday, April 11, 2014

Wiedenbeck: Recovering the Tax Shelter Limitation Aspect of ERISA

Peter J. Wiedenbeck (Washington University), 'Ninety-Five Percent of Them Will Not Be Missed': Recovering the Tax Shelter Limitation Aspect of ERISA, 6 Drexel L. Rev. ___ (2014):

ERISA is justly hailed as a paramount achievement in labor and social welfare legislation. The worker-protective elements of ERISA get most of the attention. Yet Congress also emphasized that employee benefit plans “substantially affect the revenue of the United States because they are afforded preferential Federal tax treatment” which justified a coordinate declaration of policy, “to protect...the Federal taxing power”. ERISA § 2(a), (c), 29 U.S.C. § 1001(a), (c). The tax-subsidized but largely unregulated regime that preceded ERISA facilitated widespread tax abuse. Reducing wasted revenue by focusing preferential tax treatment on plans providing retirement savings to a broad cross-section of the workforce — not just to the business owners — is the often-overlooked dual objective of ERISA. This article seeks to recover the tax shelter limitation aspect of ERISA. Part II briefly explains the origins of ERISA’s tax controls. Part III surveys ERISA’s accomplishments and limitations in suppressing pension tax shelters. Part IV describes later momentous developments to which ERISA pointed the way.

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