Tax reform initiatives put forth by both the Republicans and Democrats fail to protect retirement savings, according to Brian Graff, executive director and CEO of the American Society of Pension Professionals & Actuaries.
Graff said he is most concerned about Rep. Paul Ryan’s interview this past week on Fox News in which he said he would like to eliminate or drastically reduce incentives for 401(k) plans. “This could be a disaster for small business retirement plan coverage,” Graff said.
Ryan’s comments were part of an overall discussion about the plan’s elimination of tax incentives for higher income folks as a way to pay for lower tax rates overall.
“Taking away incentives for small business owners and decision-makers is really, essentially an attack on 401(k) plans. The guys who get hurt are the workers who might get left without a plan at all,” Graff said.
Ryan, R-Wis., is chairman of the House Budget Committee and author of the GOP’s budget plan that was introduced last week. As part of the plan, Ryan said he would like to eliminate all exceptions, loopholes and deductions from the tax code.
“The tax code is patently unfair: Many of the deductions and preferences in the system—which serve to narrow the tax base—were lobbied for and are mainly used by a relatively small group of mostly higher-income individuals,” Ryan said. He also proposed restructuring federal retirement benefits so that federal employees would have to “make a more equitable contribution to their retirement plans.”
“I don’t think he fully appreciates the dynamics that if you don’t incentivize small business owners they are not going to bother with a plan in the first place. Taking away incentives would dramatically impact retirement security for workers in a negative way,” Graff added.
Graff said that the ASPPA also is not thrilled with President Barack Obama’s deficit-reduction plan, which was proposed at the end of 2010. He said that Obama’s budget amounted to a “double tax” on those who would offer retirement plans, reducing incentives for higher income people who won’t get as big of a tax break and capping any tax breaks at a lower percentage.
Obviously, any talk about tax reform is just talk right now. Nothing is going to move ahead until after the November election, he said. “This is just prep talk. Obviously we have great concern when people talk about eliminating incentives that are so critical for the future of American workers. They shouldn’t be talking so casually about something that could have such a dramatic impact.”