NAILBA Perspectives - May/June 2014 - (Page 40)

legislative update Dead on Arrival T he life insurance industry has been preparing for years for Congress to pass a comprehensive tax reform bill for the first time since 1986. Agent associations, concerned that the tax treatment of life insurance could be subject to revenue-hungry tax writers looking to close tax loopholes, have been working together to advocate vigorously on behalf of the important financial tools that provide financial security to 75 million American families. At this point last year, tax reform almost seemed like it could become reality. House Ways and Means Committee Chairman Rep. Dave Camp (R-MI) created eleven bipartisan working groups, each comprised of Ways and Means Committee members and tasked with reviewing specific areas of the current tax code. House Republican leadership supported the Chairman's efforts and saved the bill number "H.R. 1" to designate the legislative importance of tax reform. The working groups collected public comments and held roundtable discussions with industry representatives throughout the first half of 2013, having wrapped up their work by early summer. The Ways and Means Committee held hearings headlined by tax experts. Chairman Camp hoped to mark-up a bill by the end of 2013. It is his last term as Ways and Means Chairman and it was beginning to look like he would leave behind a legislative legacy of passing a major tax code overhaul; the last such Chairman to achieve this feat was Rep. Dan Rostenkowski (D-IL) when Congress passed the Tax Reform Act of 1986 (passed during mid-term election season, to boot!). Alas, the government shutdown occurred in September, and afterward the appetite for passing any 40 perspectives MAY/JUNE 2014 kind of major legislation quelled. House leaders who stood behind Camp's vision were suddenly backtracking. This did not stop Chairman Camp from releasing a tax reform discussion draft in late February of this year, a draft bill that would be H.R. 1 but is not even scheduled for a Committee markup. The discussion draft is viewed as a foundation on which future discussions on overhauling the tax code will be based. Is the idea of tax reform dead? It could be more accurately described as being in a medically-induced coma as doctors decide the best course of action; for the rest of the year, however, it will remain attached to its feeding tubes. There is no Member of Congress that doesn't believe the country is long overdue for a reform of the tax code. It's going to happen-it's a question of when and how, not if. The primary impediment to "getting it done" as it relates to tax reform is partisan gridlock, with Congressional Democrats and Republicans blaming each other for not allowing anything to get accomplished. It is mid-term election season, and there is a very real chance that Republicans could take back the Senate (they are expected to hold the House). If this is the case, they will be in a good position to pass legislation reflective of their priorities beginning in 2015. However, if they were serious about any legislation becoming law, it would need to be tailored to meet a 60-vote threshold for cloture in the Senate so that the Senate can move the bill (any Republican majority in the Senate would be slim, so they will need some support from Democrats to get anything done). Even if Senate Republicans were to invoke another "nuclear option" and eliminate the 60-vote thresh- old needed to vote on legislation (Senate Majority Leader Harry Reid pushed the red button last autumn, but only for Federal court nominees and presidential appointments), the legislation would still need to get the President's approval, and it is inconceivable that Republicans would command the two-thirds majority necessary in both houses to override a Presidential veto. Furthermore, the hypothetical Republican majority in both the Senate and the House could be short-lived as 2016 is expected to be an extremely tough year for Republicans in both Congressional and Presidential races; therefore any major legislation they can point to (such as tax reform) could boost their 2016 electoral chances. It's a possible outcome considering the President would also want to have some kind of major legislative accomplishment in his last two years in office. On the other hand, if Democrats retain their majority in the Senate while Republicans retain the House, a major piece of legislation such as tax reform will be hard to pass going into Presidential election season if the past four years have been any indication. It's exhausting for us not only as observers of the political process but as participants. Perhaps a few of us are suffering from "message fatigue" but we must remain vigilant. No matter what happens in Congress over the next several years, the Joint Committee on Taxation will continue to list inside buildup of cash value on life insurance as a tax loophole that needs to be repealed, and we need to continue to remind Congress that it is not. Mark Valentini, MPP is NAILBA's Director of Government Affairs. You can contact him at 703.383.3073 or to learn more about NAILBA's advocacy efforts.

Table of Contents for the Digital Edition of NAILBA Perspectives - May/June 2014

NAILBA Perspectives - May/June 2014
Chairman’s Corner
CEO Insights
How to Train New Marketing Reps
Reading Ahead
Life Happens
The 3M Formula for BGA Marketing Success
NAILBA Charitable Foundation
Member Profiles
Agency Successor Networking Group
Agency Resources
member Profiles
MDRT Annual Meeting
Legislative Update
Calendar of Events
Index of Advertisers

NAILBA Perspectives - May/June 2014