The American Council of Life Insurers (ACLI) issued the following statement on the proposed 2013 federal budget:
Washington, D.C. (February 13, 2012) — “The American Council of Life Insurers (ACLI) is concerned about provisions in the Fiscal Year 2013 federal budget proposal that would impose new taxes and fees on an industry that plays a key role in helping 75 million American families and thousands of businesses across the country plan for their financial futures.
“One proposal would impose new taxes on a type of life insurance used by businesses of all sizes. Corporate-owned life insurance (COLI) protects businesses against financial or job loss stemming from the death of owners or key employees. COLI is used to ensure business continuation and is widely used as a mechanism for funding employee and retiree benefits.
“Another proposal would undercut longstanding rules regarding life insurers’ dividends-received deductions (DRD) that are designed to prevent double taxation of corporate earnings. The administration’s proposal would reduce the DRD that life insurers use in accounts that fund variable life insurance and variable annuity contracts—key products for financial and retirement security.
“A third proposal would impose a financial crisis responsibility fee on certain bank and thrift holding companies in an effort to recoup funds used for the Troubled Asset Relief Program (TARP). The proposal could apply the new fee to life insurers that own a bank, thrift, or control certain broker-dealers whether they received TARP funds or not. In fact, the very few that participated in the TARP program have already repaid their loans.
“We are also concerned that as the administration encourages small businesses to adopt retirement savings plans it also proposes a new tax on workers and small business owners who make contributions to these plans and Individual Retirement Accounts. These two proposals are at cross purposes.
“When you consider the importance of encouraging people to save for the future, the proposed tax hikes on industry products don’t make sense. One in every five dollars of Americans’ long-term savings is in life insurance and annuities. Discouraging people from turning to products that are helping to provide financial security and peace of mind represents unwise tax policy.
“Congress has rejected similar proposals before. We urge the withdrawal of the COLI, DRD and bank fee proposals. In addition, we urge the withdrawal of the proposal to impose new taxes on contributions to retirement plans and Individual Retirement Accounts.”
ACLI also joined with other life insurance industry trade associations in opposing certain budget proposals.
The American Council of Life Insurers (ACLI) is a Washington, D.C.-based trade association with more than 300 legal reserve life insurer and fraternal benefit society member companies operating in the United States. ACLI members represent more than 90 percent of the assets and premiums of the life insurance and annuity industry. In addition to life insurance and annuities, ACLI member companies offer pensions, 401(k) and other retirement plans, long-term care and disability income insurance, and reinsurance. ACLI's public Web site can be accessed at www.acli.com.