Legislative provisions viewed as harmful to public pensions left out of U.S. tax reform package
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| Graphic: iStock/Duncan_Andison |
By Allen Jones, TEXPERS Communications Manager
The U.S. House Ways and Means Committee's new tax reform
package of legislation does not contain provisions that would have imposed what
TEXPERS and other retirement groups viewed to be unnecessary and unfunded
federal mandates harmful to local and state public pensions.
“First and foremost, the package does not include public pension proposals that our organization has been
actively opposing,” says Paul Brown, president of TEXPERS. “However,
it does include language on governmental plan 'pickups,' specifically that ‘a contribution shall not fail to be treated as picked up by an
employing unit merely because the employee may make an irrevocable election
between the application of two alternative benefit formulas involving the same
or different levels of employee contributions.' TEXPERS along with our national and state coalitions will continue to monitor and keep our members
informed in regards to this important issue.”
Brown
says he is appreciative of TEXPERS members who contacted their elected
representatives to express their concerns about the proposals.
Last
week, House Republicans introduced tax reform legislation aimed at expanding
2017's Tax Cuts and Jobs Act. Although the primary purpose of the package
is to make tax cuts for individuals and small business owners permanent,
legislative proposals made earlier during the summer included retirement
provisions.
The Public
Employee Pension Transparency Act (House Bill 6290), introduced by
California Republican Rep. Devin Nunes June 28, would have amended the Internal
Revenue Code of 1986 for reporting and disclosure by state and local public
employee retirement pension plans. TEXPERS' executive director, Max Patterson,
and the association's president, Paul Brown, expressed their opposition to the
proposed act in joint letters written in July to House Speaker Paul Ryan (R-Wisconsin)
as well as to Ways and Means Committee Chairman Kevin Brady (R-Texas) and the
committee's ranking member, Rep. Richard Neal (D-Massachusetts).
TEXPERS' leadership stressed that the proposed act conflicts
with existing governmental accounting standards and would eliminate the
tax-exempt bonding authority of state and local governments.
"Consider the fact that every state and many localities
have recently made modifications to pension financing, benefits structures, or
both and none required federal intervention," wrote Patterson and Brown.
Click here
to read TEXPERS' previous blog post about PEPTA and here
to read TEXPERS' letter to Congressman Brady.
TEXPERS wasn't alone in opposing PEPTA. Twenty national
organizations sent letters of opposition to all members of the U.S. House of
Representatives opposing the legislation.
There is more good news. The tax reform package also doesn't
include an extension of the Unrelated Business Income Tax to governmental plans
or the "Rotherficiation" of contributions to all defined-contribution
plans, which could potentially threaten the current tax treatment of
governmental employee contributions to their defined-benefit plans.
According to Forbes’ synopsis of the proposed tax reform
bill, it consists of three bills:
- H.R. 6760, “Protecting Family and Small Business Tax Cuts Act of 2018”
- H.R. 6757, “Family Savings Act of 2018”
- H.R. 6756, “American Innovation Act of 2018″
Click the links to open pdf documents offering more details
of each legislation.
About the Author:
Allen Jones handles the print and online media needs of the Texas Association of Public Employees Retirement Systems. Before joining TEXPERS in 2017, he worked as a freelance journalist covering the Houston area for a daily newspaper; served as a publications manager for Hibu, an international corporation; and spent nearly 10 years working for Houston Community Newspapers, a group of community publications. He has a bachelor’s degree in journalism and communications.
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