- First, at the moment, it is not certain that a proposal(s) negatively impacting life insurance will be included in the Camp Draft. Very few specific details regarding the language of the Draft are known and until the document is made public, there are no guarantees as to its contents.
- Second, the Camp Draft will not yet be assigned a bill number and there is currently no indication that the Draft will be marked up and voted on by the Ways & Means Committee. This means that while the document will come in the form of legislative text, it could easily be viewed as a policy white paper rather than draft legislation. As such, lawmakers will be seeking feedback on the Draft and the AALU, through both our legislative team in Washington and our volunteers, will be active in providing our perspectives.
- Finally, House Republican Leaders have made it clear that they will not necessarily endorse the substance of the Draft, nor will they make an effort to convince rank-and-file members to support it. This responsibility will fall on Chairman Camp and other supporters of the Draft. There is likely to be some degree of dissonance amongst the GOP caucus regarding both the substance and timing of reform as well as the associated political costs and benefits. Until Chairman Camp can establish that the caucus generally supports the Draft, any further consideration of it is uncertain—if not doubtful.
It’s important to note that while this proposal would apply to owners of COLI, from a policy perspective, this can simply be viewed as indirect tax on life insurance—which, in principle, is impactful for the entire AALU membership. In addition, the Draft may include other provisions affecting life insurance products and companies. Therefore, while the release of the Camp Draft is one step in the tax reform process, it should—and will—be taken seriously by the AALU and the entire industry.
For further reading on the above-mentioned proposal and the history of legislation and regulation of COLI, see AALU WRNewswire #14.02.03, Proposal to Modify the Tax Treatment of Corporate-Owned Life Insurance Continues to Receive Attention (Feb. 3, 2014).
Next Steps. After careful consideration of the details and anticipated impact of the Camp Draft, it is likely that AALU members will need to engage to prevent any proposal that may be harmful to life insurance products from becoming law. Look for updates from the AALU next week regarding the latest with the Camp Draft, including specific opportunities for AALU volunteers to plug into our action plan and contribute to our advocacy.
In the meantime, one thing that every AALU member can do to help make a difference isregister for the 2014 AALU Annual Meeting on May 4th - 6th in Washington, DC., and visit their Member of Congress. The 2014 Capitol Hill Club will occur on Tuesday, May 6th and will present a rare opportunity for AALU members to meet with policymakers en masse while a harmful legislative proposal effecting the tax treatment of life insurance is under consideration.