House budget chairman targets tax breaks

A leader of Republican efforts to cut government spending and tackle the federal deficit indicated Thursday that he embraces the idea of cutting so-called tax expenditures.
DEC 19, 2010
A leader of Republican efforts to cut government spending and tackle the federal deficit indicated Thursday that he embraces the idea of cutting so-called tax expenditures. He cautioned, however, that it is too early to tell whether he and his GOP colleagues will go after favorable tax treatment for retirement plans and insurance policies. “We have to face the tax expenditure gauntlet,” Rep. Paul Ryan, R-Wis., the new chairman of the House Budget Committee, said at an event at the National Press Club. “How you do that matters greatly to our economic competitiveness.” Mr. Ryan, who has gained a reputation as one of the capital's foremost proponents of fiscal discipline, said he supports an overhaul of the tax system which would broaden the tax base and lower rates. That was one of the goals of the reform plan offered by a presidential deficit commission in December. The panel's proposal called for the elimination of all federal tax expenditures, including killing tax breaks and deferrals for retirement, life insurance and employer-sponsored-health-care plans. The money saved through ending the expenditures would allow individual rates to drop to 8%, 14% and 23% from their projected 2011 levels, which range from 15% to 39.6%. The commission's plan did not gain enough votes to force congressional action. Mr. Ryan served on the panel and voted against the proposal. He said that tax reform should be a priority in the new Congress, however, because it can lead to stronger economic growth. He acknowledges that the details of a tax overhaul will draw strong opposition from many interest groups. “We're looking out for the American people,” Mr. Ryan said. “We're looking out for the American economy. We're not looking out for this narrow special interest that has a little piece of the tax code carved out which serves as a direct barrier to entry against … competitors.” The insurance industry will fiercely defend tax-deferred buildup of cash value in life insurance polices, and the tax-free death benefits of those plans. Industry groups argue that 75 million American families have insurance products in their portfolios. “What we don't want to do is for the American public to be disincented to provide for their own financial security and, therefore, creating a greater dependence on government,” said Terry Headley, president of the National Association of Insurance and Financial Advisors. He said that NAIFA is taking that message to members of Congress. “These are conversations we are having and will continue to have,” Mr. Headley said. It's too soon to tell whether NAIFA and other groups will be persuasive in protecting their favorable tax status. Mr. Ryan promised many hearings on tax issues over the course of the two-year Congress. “Do I believe there's a majority within the majority [of House Republicans] for tax reform? Yes, I do,” Mr. Ryan said. “We have to figure out how best to achieve that. I can't answer that question yet, because we haven't even begun to do our research on it.”

Latest News

Judge OKs more than $90 million in settlement money for GWG investors
Judge OKs more than $90 million in settlement money for GWG investors

Mayer Brown, GWG's law firm, agreed to pay $30 million to resolve conflict of interest claims.

Fintech bytes: Orion and eMoney add new planning, investment tools for RIAs
Fintech bytes: Orion and eMoney add new planning, investment tools for RIAs

Orion adds new model portfolios and SMAs under expanded JPMorgan tie-up, while eMoney boosts its planning software capabilities.

Retirement uncertainty cuts across generations: Transamerica
Retirement uncertainty cuts across generations: Transamerica

National survey of workers exposes widespread retirement planning challenges for Gen Z, Millennials, Gen X, and Boomers.

Does a merger or acquisition make sense for your firm? Why now is the perfect time to secure your firm’s future
Does a merger or acquisition make sense for your firm? Why now is the perfect time to secure your firm’s future

While the choice for advisors to "die at their desks" might been wise once upon a time, higher acquisition multiples and innovations in deal structures have created more immediate M&A opportunities.

Raymond James continues recruitment run with UBS, Morgan Stanley teams
Raymond James continues recruitment run with UBS, Morgan Stanley teams

A father-son pair has joined the firm's independent arm in Utah, while a quartet of planning advisors strengthen its employee channel in Louisiana.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.

SPONSORED Beyond the dashboard: Making wealth tech human

How intelliflo aims to solve advisors' top tech headaches—without sacrificing the personal touch clients crave