Senior members of tax writing committees in both the House and Senate recently have indicated their desire to not only reform the tax code, but to rebuild it from the ground up. A complete overhaul of the tax code could have significant repercussions for key HR provisions that affect employee benefits - namely retirement, health care and education assistance.
Last week, Senate Finance Committee Chairman Max Baucus (D-Mont.) and Ranking Member Senator Orrin G. Hatch (R-Utah), made their intentions public with a letter to their colleagues in the Senate. The senators provided a list of requirements for the code to be built upon. “To make sure that we clear out all the unproductive provisions and simplify tax reform, we plan to operate from an assumption that all special provisions are out unless there is clear evidence that they: (1) help grow the economy, (2) make the tax code fairer, or (3) effectively promote other important policy objectives,” they wrote their Senate colleagues.
Baucus’ counterpart in the House, Ways and Means Chairman Dave Camp (R-Mich.), publicly has also committed to moving on tax reform, promising a bill by the end of the year. Camp began the year with 11 working groups dedicated to examining key areas of the tax code. The working groups solicited information from the public that was compiled by the Joint Committee on Taxation. Ultimately, all information gathered in that process will shape the bill that Camp plans to introduce.
Employer-provided benefits such as health care, retirement and education assistance could be scrutinized as both chambers try to simplify the tax code. Members of the Senate, in particular, have a month to justify provisions they deem important. Senators will have until July 26, 2013, to submit to the Finance Committee tax provisions that meet the criteria for the new tax code, as well as provisions that need to be eliminated or reformed. This new approach requires senators to go on record advocating for provisions, with the hopes that wasteful provisions that served special interests will be removed.
SHRM is the chair of the Coalition to Protect Retirement, a diverse group of associations committed to preserving the current tax treatment of retirement plans. SHRM believes that employer-sponsored retirement plans are critical for employees to be able to save for retirement and the government should facilitate and encourage voluntary employer-sponsored plans as well as individual savings through consistent tax incentives and simplified regulations.
As proposals begin to surface, we’ll be sure to share them with our readers.