NAIFA GovWatch

State of the Union Address Signals Challenges for NAIFA Members

Issue: Tax and Health Reform

Date: January 26, 2011

Action Taken: On January 25, 2011, President Obama delivered the annual State of the Union address to a joint session of Congress from the House Chamber at the U.S. Capitol. The State of the Union gives the President an opportunity to not only report on the condition of our Nation, but also to outline his legislative agenda and priorities to Congress and the American people.

In his address, Obama called for lower corporate tax rates and fewer loopholes. Specifically, the President called for paying for tax reform by broadening the base through the elimination of tax expenditures that are currently a part of the Internal Revenue Code. Life insurance and annuity inside buildup, retirement savings in pension plans, and employer-paid benefits are all characterized as “tax expenditures.”

“Over the years, a parade of lobbyists has rigged the tax code to benefit particular companies and industries. Those with accountants or lawyers to work the system can end up paying no taxes at all. But all the rest are hit with one of the highest corporate tax rates in the world. It makes no sense, and it has to change,” the President offered. “So tonight, I’m asking Democrats and Republicans to simplify the system. Get rid of the loopholes.” insisted the President.

While the President defended the new health care law against Republican repeal efforts, he signaled a willingness to make some changes beginning with the expanded 1099 reporting requirement. “We can start right now by correcting a flaw in the legislation that has placed an unnecessary bookkeeping burden on small businesses,” he said. The president also suggested additional measures to reduce health care costs should be considered, including medical malpractice reform.

Next Steps: The priorities described by the President are expected to be fleshed out in greater detail in his fiscal year 2012 budget proposal, which will be released around Feb. 14.

NAIFA will continue to explain how current tax rules governing life insurance, annuities and employer-provided benefits promote individual and family financial security and to urge the continuation of incentives designed to encourage people to tie up funds for long term financial security.

NAIFA’s health reform goals have been and continue to be ensuring affordable coverage for all Americans. NAIFA supports bipartisan targeted revisions to improve affordability and sustainability of private insurance choices, and to ensure consumers have access to professional services provided by licensed and regulated insurance agents.

NAIFA Staff Contact: Diane Boyle, Vice President - Federal Government Relations; or Dani Kehoe, NAIFA Of Counsel.

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