Expected NQDC Legislation

[Guest TCW]

I was talking to an ABC staffer today about the Senate Committee Markup that didn't make it into the Growth Act, and it's potential to resurface in a few bills due through in the July-August timeframe.

Based on what been said, it looks like the focus has narrowed to second elections, offshore trusts, withdrawals, Treasury opinion conformity, and "haircut" provisions, leaving the other HR 2 proposals, like "investment mirroring", off the drafting table.

Any informed opinions about the likelihood of finally seeing the ever threatened DCP legislation this summer?

[mbozek]

About as like as Boston winning a world series. The current tax legislation currently pending would reduce revenues.

[Guest Harry O]

The problem is that the deferred compensation legislation will raise a couple billion or so of revenues (presumably on the theory that both the income inclusion and deduction of impacted arrangements are accelerated from a later date under the current rules). Seems tempting -- raise some revenue while at the same time taxing fat cats like those perceived slobs at Enron. I'm not as confident as mbozek that this legislation is going nowhere. I think the odds are 50/50.

[mbozek]

The nqdc provisons are part of legislation that makes the EGTRRA benefit provisions permanent at cost of $80 B. A couple of billion is a drop in the bucket - it no longer adds up to real money. By the way the fat cats at Enron lost $350 M in nqdc when the co filed for bankruptcy.

[Guest Harry O]

The "fat cats" (that is, senior management) at Enron lost very little, relatively speaking, by comparison to the "not-so-fat cats" (below senior management). If you were in the know or knew the right person at Enron, you got your money out with a haircut.

P.S. A couple of billion is important when you are trying to come up with revenue offsets. Every dollar counts when you are trying to satisfy those legislators who subscribe to the belief that every dollar of tax "cuts" needs to be offset with tax "increases".

[mbozek]

Todays NY Time had an article that the house passed tax relief legislation for the middle class as part of an 82B tax bill which the senate will not agree to because it increase the deficit. My take is that in the aftermath of the recent 350B tax cut, any new tax and corporate governance proposals will be stalled because Congress has too much on it plate right now trying to pass a medicare drug bill as well as going into the annual budget dance for the Fiscal yr beginning 10/1 and the shut down for the summer. The sense of Congress is that Sarbanes-Oxley was sufficient corporate reform legislation. Besides the corporations are fighting nqdc tax reform proposals with their best lobbists.