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SIFMA today released the following set of statements from Acting President and CEO, Kenneth E. Bentsen, Jr. in response to various provisions contained in the Obama Administration’s Fiscal Year 2014 Budget Proposal.
Corporate Tax Reform:
“Pro-growth tax policies have proven to build the United States into the world’s largest economy. As our economy evolves so should our tax code, and it is critical for the future prosperity of every American that the United States continue to allow U.S. firms to grow through investment at home and compete globally. We generally support the administration’s efforts to make our business tax code more competitive while lowering rates broadly.”
Capping Contributions to IRAs:
“We are concerned about proposals that will negatively impact an individual’s ability to save for retirement. Savings have a positive effect on the capital markets, while helping maintain and improve the quality of life for future generations of retirees. We need to be emphasizing the importance of saving and saving early, not changing the tax rules mid-stream.”
Tax Treatment of Financial Products:
“We have concerns that the mark-to-market proposal to require individual retail investors to pay tax on unrealized annual appreciation in a wide array of assets at ordinary income tax rates, before receipt of cash, would reduce the current incentives for savings and investment, particularly with respect to assets held outside retirement accounts. The mark-to-market proposal would impact the routine investments of ordinary investors, many of whom are not at all wealthy or sophisticated, but who may have derivative exposure due to holdings in mutual fund shares, exchange traded notes (ETNs), exchange traded funds (ETFs) among other holdings.
“We also have concerns about the average basis proposal and the proposal to expand current taxation of market discount on certain bonds.”
28 Percent Cap on Tax Preferences:
“This proposal would effectively impose a partial tax on otherwise tax-exempt municipal securities’ interest and it would not grandfather existing municipal bond holdings. Municipal bonds play a significant role in financing infrastructure and other projects at the state and local level that are essential to economic growth and job creation. Taxing municipal bond interest would likely prevent investors from entering into this critical market, thus making it harder for states and municipalities to fund job-creating projects.”
America Fast Forward Bonds:
“We support President Obama’s proposal to create America Fast Forward Bonds. Similar Build America Bonds (BABs) have helped finance hundreds of projects nationwide, including construction of schools, power plants, transportation projects, water and sewer systems and many others. They created a new financing vehicle and broadened the investor bases for state and local borrowers. They also saved states and localities and their taxpayers billions of dollars in interest costs. BABs expired two years ago, but the program’s benefits merit the program’s reinstatement under the terms the President has proposed.”
Bank Tax:
“A tax on financial institutions continues to be an ill-timed and ill-considered concept. It is important to remember that TARP capital injections into banks have, by and large, been paid back with significant profit to the taxpayer—over $19 billion by the end of 2012. Imposing a broad-based tax on financial institutions and unfairly tying it to the mostly repaid TARP program ultimately serves as a tax increase on individual investors.”
Independent Contractors:
“Taxpayers in the financial services industry rely on the current rules that have been settled for many years. In general, we agree that areas of our tax laws should be revisited from time to time, but we have concerns about the Administration’s approach to reform in this case and its potential impact on the financial services industry.”
