The devastating economic impact from COVID-19 is far from over. Millions of Americans have lost their jobs, including a disproportionate number of older workers. About half of America’s working adults said the pandemic will make it harder to achieve long-term financial goals. And minorities have been especially affected as far more Black and Latino families are saving less money than white families.
Now more than ever, policymakers need to focus on ways to help Americans protect their family’s financial future.
That is why a tax bill being considered by the Colorado legislature is so concerning. Instead of supporting Colorado families, it would impose an unfair tax on annuities that aren’t part of an employer-sponsored plan.
Annuities are the only private market product that can provide guaranteed income for a lifetime. They are a key pillar in retirement planning for Americans of all stripes. Indeed, the average non-qualified annuity owner makes $70,000 a year. Yet, the bill being considered would adversely affect Colorado annuity consumers saving for retirement, regardless of their occupation, life stage, or economic status.
That includes small business owners and the self-employed including waitresses and gig workers. These Coloradoans are most likely to lack an employer-provided pension.
The tax also would hit Colorado’s farmers and ranchers. They often fund their retirements from the proceeds when they sell their farms or ranches. This proposal would unfairly subject them to a second round of taxation if they sought the guaranteed income stream of an annuity.
In addition, the tax would strike structured settlements and inflict financial harm on some of Colorado’s most vulnerable citizens. Some of the settlement funds that were intended to provide care and medicines for victims disabled by negligence would instead be diverted into the state coffers.
This legislation is unfair and bad public policy. At a time when so many are struggling financially, this tax would make it harder and more expensive for Coloradoans to save for retirement. Legislators should protect people working to secure their family’s financial future and scrap this proposal.
Susan K. Neely was President and CEO of the American Council of Life Insurers (ACLI), the nation’s leading trade association determined to help families live better lives by achieving financial security and certainty. As president and CEO, Neely drove public policy and advocacy on behalf of ACLI’s member companies that represent 93 percent of industry assets and serve 90 million families. She is CEO Emeritus through December, 2024.
