The Obama administration wants to impose a tax of 2.9% on income from annuities for individuals earning more than $200,000 and families earning more than $250,000. The purpose of the tax is to fund Medicare.
Every person who owns an annuity, regardless of income, should express their concern over this money grab. If they get away with this, watch for them to then tax life insurance death benefits. Here is yet another example of this administration’s policy of spend and tax!
The American Council of Life Insurers (ACLI), a life insurance trade group, is expressing its concern over this proposal. The ACLI recently sent a letter to Treasury Secretary Tim Geithner stating such a tax would hurt American’s ability to save for retirement.
Frank Keating, ACLI president, urged Mr. Geithner to reevaluate this proposal that will increase taxes on an important retirement security tool.
Revenue generated from this tax would fund the Medicare Hospital Insurance trust fund included in the Patient Protection and Affordable Care Act, more popularly known as “Obamacare”.
How illogical is this tax!! Our “leaders” in Washington should be devising ways to assist Americans in their retirement planning, not taking away a tool that has been used by millions for many years. In an age of disappearing pensions and decimated 401(k) accounts, you would think those geniuses in Washington would come up with something to help not hinder us in our retirement planning. This is yet another clear example of this Administration’s socialist approach to solving the country’s problems. Take from one group and re-distribute. That is not what America is about!
“Currently, Americans face unprecedented difficulties securing their retirement income in an environment that has shifted longevity, savings and other retirement risks onto the individual,” Keating said in the letter. “In such a landscape, policy-makers should not create a disincentive for annuity products that help Americans address these risks.”
The immediate gains to the federal budget from this tax will result in huge losses. These taxes, as the ACLI points out, will have the unintended effect of discouraging people from using these tools to plan for their financial futures. If people who struggle to save a few dollars each month stop using these investment vehicles, then a far bigger problem, and much larger taxes, will await Congress and all of us down the road.
As an alternative, Mr. Keating wants Congress to create tax incentives for people preparing for retirement, which would encourage them to use tools like annuities to develop lifetime income streams.
Amen to that!
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