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Legislative provisions viewed as harmful to public pensions left out of U.S. tax reform package

  • By: admin
  • On: 10/03/2018 10:37:10
  • In: News
  • Comments: 0
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.
 
Graphic: iStock/Duncan_Andison

By Allen Jones, TEXPERS Communications Manager

 
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:
 
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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