This year has exposed vulnerabilities throughout America like no other. The uncertainties of the COVID-19 economy and its impact on vulnerable communities has highlighted the growing societal need for financial protection.
That is why we are so concerned with HB20-1420, a bill under consideration by the Colorado legislature that would impose new taxes on consumers of annuities. Sadly, this unwise proposal would make it more expensive for Colorado residents to save for retirement.
As lawmakers strive to address financial insecurities, the life insurance community is helping to drive solutions to protect Americans regardless of where and how they work, their life stage, or the economic status of their household. That means meaningful, sustainable opportunities through the private market to meet the needs of constituents, small businesses, and vulnerable communities. We appreciate our responsibility in strengthening the social safety net for all Americans.
Life insurers offer annuities, the only financial product in the marketplace that offers guaranteed income for life. During the market volatility spawned by COVID-19, the importance of stable, guaranteed income from annuities has been reaffirmed.
This bill being considered by the Colorado legislature would significantly impact farmers, ranchers and small business owners. They are most likely to lack an employer-provided pension. For retirement, they often rely on the funds they receive when they sell their farms, ranches and businesses. This proposal subjects their life savings to a second round of taxation on already taxed savings.
Moreover, the tax would hit structured settlements and harm the most vulnerable of Colorado’s citizens. Structured settlements provide guaranteed, stable income to injured parties in liability lawsuits. The proposal will tax those funds intended to ensure that a child or adult disabled by negligence will have access to the care and medicines they need.
HB20-1420 is bad public policy. It is unfair to Colorado citizens, including retirees and those without employer-provided retirement plans. Legislators should protect people who are working to secure their financial future and reject this proposal.