The life insurance industry is regarding the fundamental tax reform proposal released last week by Rep. David Camp, R-Mich., as a call to arms, with several industry trade groups with vaunted reputations for making their views known to members of Congress planning fly-ins this spring in order to make their concerns very clear.

The industry is also girding for the Obama administration to propose in the fiscal year 2015 revenue plans, the so-called “Greenbook” that it will release Tuesday, proposals that would again impact the industry. For example, some of the same proposals for hitting up on the industry contained in the Camp proposal have been included as revenue-raisers in past budgets by the Obama administration.

(These include reductions in the tax benefits for Corporate-Owned-Life-insurance (COLI) and on reducing the Dividends Received Deduction in tax-advantaged products. DRD is a tax deduction received by a corporation on the dividends paid to it by companies in which it has an ownership stake. Another industry lobbyist said that Obama’s proposed budget last year added limitations to accumulations in tax-qualified retirement plans, and he anticipates that that also could be included in the new budget.)

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The industry is upset because the Camp proposal would raise the cost of some insurance products and make others unaffordable. One provision, COLI, would impose new taxes on life insurance used by both large and small businesses. This provision was visited at length in 2005 and 2006, one lobbyist said, and a compromise limiting its scope and specifying its tax treatment was crafted that passed with strong, bipartisan support. Moreover, provisions in the Camp draft imposing new taxes on retirement savings and changing contribution limits and distribution rules on these products is adding to the ranks of trade groups and agents and brokers concerned about the implications of the Camp proposal and preparing to make their views known to members of Congress.

The proposal is also stirring up another constituency, supporters of so-called “stretch IRAs.” These are instruments whereby retirement account owners name their children or grandchildren beneficiaries of their IRAs or Roth IRAs and these young heirs can stretch out withdrawals over their own projected lifespans, enjoying potentially decades of extra tax deferred (or in the case of Roths, tax free) growth. The Camp proposal would limit use of stretch IRAs. Legislation has also been introduced in several of the last Congresses that would also impose limits on stretch IRAs.

“Nobody likes this draft,” one industry lobbyist said. He added that members of the Association for Advanced Life Underwriting and the National Association of Insurance and Financial Advisors plan fly-ins this spring over this issue.

The industry concerns stem from the fact that they are similar to those proposed by Rep. Charles Rangel, D-N.Y., when he headed the House Ways and Means Committee in 2009, when Democrats controlled the House.

“What Camp did was to propose tax changes that would raise the cost of products and make them unaffordable,” the lobbyist said. “It is almost like comparing this tax bill to the ‘mother of all tax bills’ as proposed by Charley Rangel in 2009. The industry is really upset,” the lobbyist said, noting that the Rangel bill was far tamer as far as disturbing industry tax advantages than the Camp bill.

Joe Lieber, an analyst at Washington Analysis in Washington and a former Senate Republican staffer, spoke to the same issue. He said in an investor’s note when the Camp draft was released Wednesday that “the odds are still very low on reform occurring anytime soon.”

He said that Camp, because of term limits, will not be chairman of the W&M panel next year even if the Republicans, as expected, retain the House.

But, Lieber mirrored the industry lobbyist’s concern when he said in his note that, “Camp’s blueprint will no doubt be used as a template for the next chairman of the Ways and Means Committee, which is widely expected to be Paul Ryan, R-Wis. “Of course, his proposal will differ from Camp’s, but many provisions will likely be similar.”

The industry lobbyist reflected this concern. This will not be taken lightly by trade organizations or the agents themselves,” he said. “So, while everyone describes the Camp proposal as Dead on Arrival, it’s still a Republican document that is on the table and could be referenced when Congress ultimately addresses these issues.”

See also: Lobbying fury begins over tax revamp with dim prospects

He said that while the Camp proposal did not touch inside buildup and death benefits, “the industry’s holy grail, it did slap the industry extremely hard in all the new ways,” such as deferred acquisition costs and on reserve calculations, for example. The Camp draft proposes modifying rules regarding the capitalization of certain policy acquisition expenses, including eliminating the 1.75 percent for annuity contracts.

As a result, the lobbyist said, the industry plans on delivering its message of concern “loud and clear.” Moreover, the lobbyist said, “our industry is widely recognized for having an incredibly formidable army of producer/agents because of their ability to generate broad grass-roots support.”

He said insurance agents “descend on Capitol Hill in ways that other industries try to mimic.” They are “great foot soldiers who know how to deliver a message,” he said.

Some provisions regarding retirement products stir deep concerns. There would be a new surtax on retirement savings for individuals earning more than $400,000 a year, and it would repeal the small employer pension startup credit. Both would be a hit to small employers.

The Camp proposal establishes a $5,500 annual limit on Roth IRA contributions that would be frozen until 2024, and tax-deferred 401(k) contributions would be capped at $8,750, with the remainder changed to Roth-style accounts.

It would also repeal the rule allowing re-characterization of Roth IRA contributions or conversions and eliminate the income eligibility limits for contributing to Roth IRAs. New contributions to traditional IRAs and nondeductible traditional IRAs would be prohibited as well.

Insured Retirement Institute president and CEO Cathy Weatherford said Camp’s discussion draft “will certainly reignite the conversation on tax policy in America.”

At the same time, she said, it will be important for policymakers to recognize the overlap between tax policy and retirement security. “Tax incentives for retirement savings have been a powerful tool in helping millions of Americans save and prepare for their retirement years, particularly for middle-income Americans, who would be less likely to save if these incentives were reduced or eliminated,” she said.

NAIFA members hit Capitol Hill