American Benefits Council
Benefits Byte


February 10, 2015

The Benefits Byte is the American Benefits Council’s regular e-mail and online newsletter for members only, providing timely reports on legislative, regulatory and judicial developments, along with updates on the Council’s activities in support of employer-sponsored benefit plans.

The Benefits Byte is published by the American Benefits Council, based on staff reports and edited by Jason Hammersla, Council director of communications. Contact information for Council staff related to specific topics can be found at the end of each story.

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Senate Finance Committee Examines 1986 Tax Reform Act as it Considers 2015 Reform Effort

Former lawmakers emphasized that bipartisanship and a comprehensive approach were critical to achieving successful tax reform in 1986 when they spoke at a hearing of the U.S. Senate Finance Committee on February 10.

The hearing, Getting to Yes on Tax Reform: What Lessons Can Congress Learn from the Tax Reform Act of 1986?, examined the environment surrounding the development and passage of the Tax Reform Act of 1986. That measure contained numerous and sweeping changes to the tax treatment of employer-sponsored retirement and health benefit plans.

Chairman Orrin Hatch (R-UT) recently released an analysis, Comprehensive Tax Reform for 2015 and Beyond, outlining various issues that he intends to examine during the effort to reform the tax code, including those relating to employer-sponsored benefits (see the December 12, 2014, Benefits Byte). Both Hatch and ranking Democratic member Ron Wyden (D-OR) emphasized the need for tax reform in their opening statements at the hearing. Wyden also stressed that, as with the Tax Reform Act of 1986, bipartisanship will be key to tax reform’s success.

Two former senators who served on the Finance Committee at that time and played key roles in writing the legislation, described the events leading to the measure’s passage as well as the issues on which they focused. The committee heard testimony from:

  • Former Senator Bob Packwood (R-OR) who served as chairman of the Finance Committee during the Tax Reform Act of 1986’s passage. During his testimony, he emphasized the importance of bipartisanship in getting tax reform to pass and stated that the best way to achieve tax reform is to include everything in “one grand bill,” not by considering separately the “individual” and “corporate” provisions of the Internal Revenue Code.
  • Former Senator Bill Bradley (D-NJ) also served as a member of the Finance Committee during the Tax Reform Act of 1986. He outlined the principles he considers crucial to tax reform success: efficiency, equity, fairness and simplification. Both he and Packwood noted the importance of having presidential support in achieving tax reform.

During the question-and-answer session, Packwood noted that he would have misgivings about only attempting business tax reform and Bradley echoed Packwood’s comment about the need to consider together corporate and individual tax provisions. In response to a question on whether reform should be on a revenue-neutral basis (i.e. do not use tax reform to reduce the Federal deficit), Packwood agreed it should be, adding that combining individual and business tax reform allows for more “wiggle room” in achieving revenue neutrality.

Wyden (who succeeded Packwood when he resigned from the Senate in 1995) asked whether achieving tax reform through the “normal process,” requiring 60 votes in the Senate for passage, would be better than passing a measure through the Budget Reconciliation process, which only requires 51 votes. Packwood agreed that the normal process would be best, as it has much more credibility.

In response to a question about moving to a consumption tax, Packwood stated that it is inevitable but noted the future danger of the ease with which Congress could raise the rate.

The Joint Committee on Taxation, which serves as a resource to both the Senate Finance Committee and its counterpart in the House of Representatives, the Ways & Means Committee, submitted a report, Background Information on Tax Expenditure Analysis and Historical Survey of Tax Expenditure Estimates, to the committee prior to the hearing. The report discusses the concept and measurement of tax expenditures (i.e. provisions of the Internal Revenue Code that account for lost tax revenue). The report is intended to help both policymakers and the public understand the size of government, how and where government resources are used and the tax and economic policy consequences that accompany various legislative choices. The report includes historical data on tax expenditures, including estimates of tax expenditures over time and the latest estimates of the largest individual and corporate tax expenditures.

In related news, the committee also recently announced the launch of five bipartisan tax working groups within the committee in an effort to facilitate congressional consideration of comprehensive tax reform in the 114th Congress (see the January 15 Benefits Byte). The full rosters for these working groups are now public. The “Savings and Investment” working group, which will cover retirement savings policy, will be made up of:

  • Mike Crapo (R-ID), Co-Chair
  • Sherrod Brown (D-OH), Co-Chair
  • Richard Burr (R-NC)
  • Johnny Isakson (R-GA)
  • Dean Heller (R-NV)
  • Tim Scott (R-SC)
  • Benjamin Cardin (D-MD)
  • Bob Casey (D-PA)
  • Mark Warner (D-VA)
  • Robert Menendez (D-NJ)

It is currently unclear which, if any, working group will examine health benefits tax policy. It may possibly be shared by the Individual Income Tax and Business Income Tax groups or simply will be considered at the full committee level.

The Council will continue to emphasize the value of employer sponsored plans as the Senate Finance Committee and its House counterpart consider tax measures on a stand-alone basis or as part of more comprehensive legislation. For more information, contact Diann Howland, vice president, legislative affairs, at (202) 289-6700.

A Bit About Your Benefits: Continuing Education Credits

For many benefits professionals, continuing education (CE) programs are an important and necessary part of your career. As part of your company’s membership investment, the Council offers webinars on a wide variety of topics. Your participation in these programs may be used for credits through state Bar associations and other professional and certification organizations.

To assist you in self-submitting for CE credits, please retain the confirmation e-mail you receive when you register for a webinar. Additional information such as the program’s moderator, agenda, date and time, and subject matter are all listed in the Council’s Webinar Archive. At the bottom of the archive page, you will find links to requirements for specific organizations and the needed forms for CE credit self-submission. Council verification of your attendance may also be requested 48 hours after a program, by clicking here.

The Council recently received status as an accredited provider of CLE credits from the Missouri Bar Association. This accreditation is reciprocal for CLE credits required by the state Bars in Alaska, California (for out-of-state members), Colorado, Florida, Hawaii, Illinois, Maine, Montana, New Jersey, New Mexico, New York and North Dakota. Another 28 Bar associations direct that you may independently request approval of a particular webinar. We are also an accredited provider of continuing education programs for the International Society of Certified Employee Benefits Specialists (ISCEBS). As we receive approval from other organizations, we will post this information on the Webinar Archive page.

For more information or to request a CE participation statement, contact Deanna Johnson, director, membership, or Mary Lindsay, receptionist, at (202) 289-6700. 

The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Council's members represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.

Notice: the information contained herein is general in nature. It is not, and should not be construed as, accounting, consulting, legal or tax advice or opinion provided by the American Benefits Council or any of its employees. As required by the IRS, we inform you that any information contained herein was not intended or written to be used or referred to, and cannot be used or referred to (i) for the purpose of avoiding penalties under the Internal Revenue Code, or (ii) in promoting, marketing or recommending to another party any transaction or matter addressed herein (and any attachment).