Life Industry Trade Groups Fire Back at Obama

At the same time, the Insured Retirement Institute issued its own statement regarding the DRD proposal.

IRI president and CEO Cathy Weatherford said the trade group's research has shown that "the tax-deferred status of annuities has been pivotal in helping middle-income Americans utilize lifetime income strategies as part of their retirement savings plan."

She said that removing this incentive would not necessarily increase tax revenue, but certainly would add a new barrier that would prevent Americans from attaining lifetime income coverage.

"With today's unprecedented retirement challenges, now more than ever, we need to protect the incentives available to help Americans attain a financially secure retirement," Weatherford added.

The new limitations on deductions for retirement contributions would extend to any tax-exempt state and local bond interest, employer-sponsored health insurance paid for by employers or with before-tax employee dollars, health insurance costs of self-employed individuals, employee contributions to defined contribution retirement plans and individual retirement arrangements.

It also calls for the deduction for income attributable to domestic production activities, certain trade and business deductions of employees, moving expenses, contributions to health savings accounts and Archer MSAs, interest on education loans, and certain higher education expenses.

However, Martin Sullivan, a contributory editor for Tax Analysts, an independent organization, cautioned that the proposals are unlikely to see the light of day.

He said he found the budget proposal makes little movement toward reform and more 'politics as usual' in tax provisions.