Georgia Insurance Commissioner John Oxendine says the National Association of Insurance Commissioners should talk about federal tax reform proposals in February 2006 at the NAIC annual meeting.[@@]
Oxendine made that suggestion here during an NAIC winter meeting discussion of the package of reforms proposed by the President’s Advisory Panel on Federal Tax Reform.
The panel is best known for suggesting a relatively low cap on mortgage interest payment deductions.
But another section of the panel’s recommendations would put life insurance and annuities in a category that would include a variety of investment products, such as mutual funds. The panel would allow a maximum of $10,000 per year in tax-free inside buildup for any combination of investments in these products, according to William Anderson, a representative for the National Association of Insurance and Financial Advisors, Falls Church, Va.
“This is the most devastating thing that could happen to the life insurance industry in my time,” Anderson said.
So far, the advisory panel’s recommendations are merely talk.
The advisory panel presented its recommendations to U.S. Treasury Secretary John Snow, and Snow and other Bush administration officials must decide whether and how to include the recommendations in formal legislative proposals.
Some observers have argued that the recommendations are dead on arrival, but Anderson said it is his understanding that President Bush and the Treasury Department are very committed to the reform proposal package and are going to pursue passage.
The issue is an election-year item that would offer Republicans in Congress running for reelection something “to run on, given that the administration is very damaged now,” Anderson said.
Many members of Congress like the new types of savings accounts the advisory panel has proposed because those members believe the accounts would help average Americans save more, Anderson said.
Opponents of the inside buildup provision have to try to get it out of the Treasury Department reform bill quickly because removing the provision will be harder later on, Anderson said.