he MassMutual Financial Group
today formally praised the Bush Administration
's budget proposal to permanently repeal Section 809 of the Internal Revenue Code. The proposal, effective for taxable years beginning in 2004, follows the last Congress' suspension of the federal tax for a three-year period ending December 31, 2003.
Robert J. O'Connell
, chairman, president and CEO of MassMutual, said, "The President's budget contains a great many important savings initiatives for the American public, but for mutual insurance companies and, most importantly, their policyholders, it contains the elimination of a tax on policyholder dividends which strengthens mutual insurance companies and, therefore, benefits their policyholders."
In its report, "General Explanations of the Administration's Fiscal Year 2004 Revenue Proposals," the Treasury Department noted, "Section 809 has been criticized as being theoretically unsound because capital contributions made to stock companies are untaxed to the company, while mutual company capital contributions in the form of life insurance premiums are fully taxed. In essence, mutual companies prepay the tax on income later distributed to policyholders as policyholder dividends."
O'Connell is also the chairman of the Washington-based Mutual Tax Committee
, which is the Washington representative for many of America's mutual life insurance companies.
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