The fate of provisions severely curtailing the use of non-qualified deferred compensation packages is likely to remain up in the air for a while, insurance industry lobbyists are warning.
A lobbyist working on the issue who declined to be identified made that observation late last week as House and Senate tax writers continue to ping-pong differing versions of the minimum wage legislation through the legislative process.
The lobbyist offered the assessment as Democrats in the House prepared to vote on legislation authorizing supplemental appropriations to fund the Iraq war late last week.
“This is going to drag on for awhile, and the Senate seems to be winning because they have been successful in stopping the House from passing minimum wage legislation that contains only a bare minimum of tax provisions–with no mention of deferred compensation.”
The omnibus package, including the House version of minimum wage legislation that contained no further curtailment of deferred compensation packages, was expected to pass the House by March 23, although House Democrats were still searching for votes for their version of the bill at press time.
According to congressional estimates, the House tax cuts would cost the Treasury $1.3 billion in lost revenue over 10 years. The House added these tax cuts–and revenue raisers to cover this cost–several weeks ago under pressure from the Senate. But the House version did not contain provisions narrowing non-qualified deferred compensation packages.
By contrast, the version of minimum wage legislation passed by the Senate in January contained revenue raisers–including curtailment of non-qualified deferred comp packages–the Senate used to provide $8.3 billion in tax cuts over 10 years to small businesses.
Commenting on the presumed House action, David Stertzer, CEO of the Association for Advanced Life Underwriting, Falls Church, Va., said that the trade group continues to oppose the Senate NQDC package.
“Regardless of the vehicle to which it is attached, AALU opposes this deferred compensation provision because of the harmful impact it could have on the ability of employees and managers to save for retirement through non-qualified deferred compensation plans,” Stertzer added. “We continue to communicate this concern to legislators in concert with other concerned groups in the business community.”
For its part, Michael Kerley, senior vice president, federal government relations for the National Association of Insurance and Financial Advisers, Falls Church, Va., said the trade group “continues to appreciate the House position to exclude a hit on deferred compensation practices or any other insurance ‘pay for’ in connection with the small business tax incentives contained in the minimum wage bill.”
The House bill is a “contrast to the Senate bill, which proposes to enact devastating changes to the tax laws governing deferred compensation,” Kerley said. “However the legislative process on the minimum wage bill unfolds, NAIFA will continue to support leaving deferred compensation tax law changes, or any other changes impacting insurance, out of the legislative mix.”
Including the minimum wage legislation and its bare-bones tax package in the Iraq supplemental was designed to build momentum for the House version, another lobbyist explained.