Home / Obama Calls for Tax Hikes on Life Insurers

Obama Calls for Tax Hikes on Life Insurers

President Obama’s proposed budget for 2013 would impose sweeping tax hikes on the insurance industry, including a restoration of 2009 estate tax rules, and sustaining the portability between the estate and gift taxes as contained in current law, but at a maximum lower level. Obama’s proposed budget would also call for an increase in the SEC’s budget level in 2013 to $1.566 billion, which is a 18.5% increase over the SEC’s 2012 appropriation.

The one nugget is another proposal from the past, this one aimed at providing an incentive for small employers to establish retirement plans for their employers.

Under current law, small employers (those that have no more than 100 employees) that adopt a new qualified retirement plan (or SIMPLE plan) are entitled to a temporary business tax credit equal to 50% of the employer’s expenses of establishing or administering the plan, in­cluding expenses of retirement-related employee educa­tion with respect to the plan. The credit is limited to a maximum of $500 per year for three years.

The administration said in conjunction with the automatic IRA proposal, to encourage small em­ployers not currently sponsoring a qualified retirement or SIMPLE plan to do so, it wants to double this tax credit to a maximum of $1,000 per year for three years (effective for taxable years beginning after December 31, 2013) and to extend it to four years (rath­er than three).

Other provisions of the proposed budget include:

•Estate tax would be turned back to the level that existed in 2009 of a $3.5 million exemption and a maximum tax of 45%. Currently, the exemption is $5 million and the maximum tax rate 35%.
•Similarly, generation-skipping transfers (or GSTs) made after Dec. 31, 2012, would be taxed at a maximum tax rate of 45% with a life-time exclu­sion of $3.5 million. Gifts made after Dec. 31, 2012, would be taxed at a maximum tax rate of 45 percent with a life-time exclusion of $1 million.
•As reflect­ed in the adjusted baseline, the portability of unused es­tate and gift exclusion amounts between spouses would be made permanent and would apply to anyone dying after December 31, 2012.
•Establishing a minimum term of 10 years for grantor retained annuity trusts.
•A special tax on financial institutions with assets of more than $50 billion. It is designed to raise approximately $60 billion over 10 years. The tax was proposed earlier in order to pay for losses associated with the Troubled Asset Relief Program, but opponents point out that the program is nearing solvency, and that for that reason is unlikely to be supported by Congress.
Despite such sweeping ambitions, however, analysts point out that the budget, as proposed, has virtually no chance of being enacted in law.

Mountain Insurance

The right coverage at the best price. Colorado's trusted insurance advisers since 1997

About Us

We are dedicated to providing our clients with the highest quality in business and personal insurance products and services at the most competitive prices in Denver, CO.

3705 Kipling Street, Wheat Ridge, CO 80033
303 420-4774
info@mountaininsurance.com