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Comprehensive Tax Reform
 

   3/7/2014
 

Last week, after more than two years in the making, House Ways and Means Committee Chairman Dave Camp (R-MI) released his long-awaited plan for reforming the U.S. Tax Code when he introduced a “discussion draft” of the Tax Reform Act of 2014. Camp’s proposal focuses on both personal and corporate tax reform and would have broad implications for employers and employees.

As anticipated, the proposal contains many provisions that are fundamental to an employer’s recruitment and retention strategies. Those include:

  • Repealing the SHRM-supported Section 127, Employer Provided Education Assistance
  • Repealing fringe benefit exemptions, including adoption, housing and moving expenses
  • Modifying retirement plans, including lowering the tax-deferred amount allowed to traditional retirement accounts (401(k), 403(b) and 457(b)) from $17,500 to $8,750 per year
  • Freezing inflation indexing on all retirement plans for 10 years, effectively reducing amounts that can be contributed to retirement accounts
  • Repealing the employer-provided child care credit
  • Repealing the credit for employee health insurance expenses for small employers
  • Repealing the Work Opportunity Tax Credit
  • Modifying executive compensation provisions

For a more in-depth analysis of the nearly 1,000-page bill, please click HERE.

Feedback from stakeholders on the legislation has been mixed thus far. House and Senate leadership have indicated that they have no desire to take up the bill (or comprehensive tax reform) this year. However, it is expected that Camp’s committee will hold a series of hearings and markups on the bill later this year. It is also anticipated that any bill that is reported out of the Ways and Means Committee this year will serve as a framework for tax reform in future Congresses.

In the employee benefits area, SHRM leads two business coalitions: The Coalition to Protect Retirement and The Coalition to Preserve Employer Provided Education Assistance. Participants of both coalitions have expressed serious concerns with parts of the bill and are currently responding with a broad-based advocacy approach that consists of direct lobbying, social media outreach, media placement and communication with external audiences.

During SHRM’s upcoming 2014 Employment Law & Legislative Conference this month in Washington, nearly 200 attendees are expected to participate in a Capitol Hill Advocacy Day (scheduled for March 19) during which they plan to discuss with their respective members of Congress and their staffs the implications this proposal would have on the workplace.

For additional information on the Camp proposal, please see:

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