No New Taxes on Our Negotiated Benefits

September 27, 2011 - The Budget Control Act of 2011, signed into law in August, outlined $1 trillion in U.S. government budget cuts, and included a framework to address additional long-term deficit reductions. ALPA has been following deficit-reduction talks closely, and is very concerned that, in the name of deficit-reduction, Congress may look to increase revenue by placing new taxes on ALPA members and millions of middle-class Americans.

The process of addressing these additional long-term deficit reductions began with the creation of a Joint Select Committee on Deficit Reduction—also referred to as the “Super Committee”—which is comprised of 12 members of Congress and is tasked with proposing new legislation that will include spending cuts and increased revenues. The goal of this Committee is to cut the budget deficit by an additional $1.5 trillion over the next 10 years. The Super Committee may seek to eliminate the tax exemption for employer-provided health care benefits and look to lower the defined contribution plan limit to increase tax revenue.

One proposal that may be considered is the reduction of government “expenditures” related to the tax-favored status of health and retirement benefits. Specifically, this could mean taxing employer-provided healthcare benefits, which could lead to higher out-of-pocket costs for pilot families and potentially dropped coverage. This proposal would radically alter the current tax exemption for employer-provided health-care benefits, which is a broad-based tax benefit for all working Americans. To learn more about this unwise proposal and how it would impact ALPA members, read more here.

Also under consideration is the lowering of the Internal Revenue Code Section 415(c) defined contribution limit on 401(k) and other defined contribution retirement plans—vehicles for personal financial security and national economic growth. For most Americans and the vast majority of ALPA pilots, their 401(k) plan is their only employer-sponsored retirement benefit. In deficit-reduction proposals under current consideration, contributions to these plans would be dramatically reduced - read more.

Both of these proposals are extremely unwise and constitute an outright attack on ALPA members’ negotiated benefits. The work of the Super Committee is already underway, and the members must report out a bill, which is not subject to amendment, to the full U.S. House and Senate by November 23, 2011 for a vote by Congress by December 24, 2011.