It’s time for financial professionals to help shape tax reform debate

Provisions of the Tax Cuts and Jobs Act of 2017 that impact individual taxpayers will expire at the end of 2025 unless Congress acts. And what Congress will do depends on who will control the legislative branch of government and the White House after the November elections.

All of this makes it a crucial time for financial professionals to get to know their elected representatives in order to help shape the tax reform debate. Diane Boyle, senior vice president for government relations with the National Association of Insurance and Financial Advisors, made the case for NAIFA members becoming getting involved in the upcoming congressional elections during a session at NAIFA’s Apex 2024 convention.

“When we talk about the cost of extending the TCJA and the national debt, we’re talking about a lot of money, and we’re talking about changes in the composition of who will make those decisions,” Boyle said. With all 435 seats in the House of Representatives and one-third of the Senate up for election in November, it’s crucial for NAIFA members to help make their lawmakers aware of what is at stake in the upcoming tax reform debate.

A high price tag

Extending TCJA comes with a high price tag – adding an estimated $4.5 trillion to the federal deficit. But if Congress does nothing, individual tax rates will revert to pre-2017 levels. The standard deduction will drop, child tax credits will be significantly reduced and there will be no limitation on the state and local tax deduction. In addition, business taxes will be impacted, with the 199A deduction expiring, and credit for paid family and medical leave also will expire.

The money to pay for extending TCJA must come from somewhere, and that’s where Boyle said NAIFA members must be educated and involved.

“Before the election even takes place, 10% of Congress will turn over,” she said. “Then when you look at how many members of Congress who were there in 2017 are not there now, you’re looking at a large number making decisions on something they weren’t a part of to begin with. So it is a huge educational opportunity for us to go in and make sure we explain what the industry does, why we do it and what are some provisions in the TCJA we care about.”

NAIFA members must educate Congress about the consequences of changing the current tax status of a number of financial products and services, Boyle said.

“We need to make sure there’s an understanding of how our industry benefits constituents so that when those decisions are made, lawmakers are well informed.”

Forming a trusted relationship with elected representatives is important for both NAIFA members and those who represent them, she said.

“Policymakers and lawmakers really do want to hear from constituents. You have to develop a trusted relationship. We're in it for the long game, and have been around for over 130 years, so we know it's not a sprint.”

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