In the late 1960s, Hollywood inflicted on the American
public a low-budget science fiction film called Mars Needs Women. With a ludicrous plot and amateurish production
values, it was widely panned by critics. Even Tommy Kirk, the film’s leading
man, called it "undoubtedly one of the stupidest motion pictures ever
made.”
This is not to say there are necessarily parallels to draw
between the film and what is going on in Washington these days. In the nation’s
capital, tax reform is serious business. And while the next few months may bring some proposals that seem to come from outer space, we
can’t simply laugh them off like a corny sci-fi flick.
The future financial well-being of the American public is at
stake. At least it is for those who hope to one day retire, receive adequate and
affordable health insurance or provide for their families when they are no longer
around to do so.
Much was made of the agreement reached earlier this month
that steered our nation clear of the fiscal cliff. But in truth, that
legislation does very little to address America’s mounting debt.
The products and services NAIFA members offer their clients emerged
from the cliff negotiations largely unscathed, which simply means they are
still on the table the next time around.
And the next time is likely to come sooner rather than
later.
There’s never a good time for elected officials to take bad
news to voters, but when faced with no choice the beginning of a new
election cycle is the most palatable time.
Which means 2013 is shaping up to be a watershed year for tax
reform.
Congress needs money. Unlike with the Martians in the movie,
we can’t call up the U.S. Army and make them go home empty handed.
There are some $1.1 trillion worth of credits, deductions
and exemptions in the tax code. Congress will be scrutinizing each one of them.
According to a recent Associated Press article, they include:
- $181 billion in tax-free employer contributions
to employees’ health insurance and expenses
- $165 billion in untaxed retirement plan contributions
- $23 billion in income from life insurance
products
As insurance and financial advisors, NAIFA members know that
there are very good reasons behind the tax treatment of insurance and
retirement products. The tax-free death benefit and tax-deferred cash-value buildup
of life insurance has been around since the permanent federal income tax came into
existence 100 years ago.
Employee-sponsored health care and retirement plans are
crucial to ensuring the long-term physical and financial health of Americans as
they grow older. Life insurance allows people to provide for the financial
security of their families, even if they are unable to do so themselves.
Without these products, and the
incentives that encourage Americans to buy them, many more people would turn to
government entitlement programs for help when they suffer financial setbacks, lack money for
retirement or have health problems.
NAIFA and its members are hard at work, reinforcing the
message with Congress that these products and their tax treatment are
important. For many families and individuals, they mean the difference between
prosperity and privation, success and failure, or even life and death.
Where Congress sees dollar signs, we are making sure they see
people.
NAIFA members have a unique ability to tell lawmakers the story of a family able
to provide for a sick child because of an employer-sponsored health plan. Or of
a small company able to stay in business because its partners were protected by
life insurance. Or of retirees able to keep their house and maintain their
standard of living thanks to an annuity product.
Unlike a cheesy Hollywood production, these are real stories.
They are stories Congress needs to hear.

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