CHICAGO - Although relief and rebuilding legislation related to Hurricane Katrina dominates Washington's near-term agenda, U.S. Rep. Jerry Weller (R-Ill.) said, growing the economy remains a long-term priority for lawmakers.
In an address opening the Investment Company Institute Tax & Accounting Conference here yesterday, the sixth-term Republican noted that a strong economy - one with expanded opportunities for investors in the capital markets and for people saving for their retirement - would be a key factor in the nation's recovery from what is arguably its greatest natural disaster.
"I represent a manufacturing district in south Chicago, so I know the positive impact a strong economy can have," said Weller, who serves on the powerful House Ways & Means Committee.
Weller cited the recent DR/CAFTA free trade agreement reached between the U.S., Central America and the Caribbean. According to Weller, with one sweep of the pen, the pact slashed a $2.3 million annual tariff that heavy equipment manufacturer Caterpillar pays on bulldozers it exports to Central America.
"Clearly, our goal, as we move forward, it to make the tax code more competitive," Weller said, noting that the U.S. has the second-highest tax burden on manufactured goods in the world.
Issues more closely linked to the mutual fund industry, however, will hopefully get the attention of Congress in the coming weeks, he noted. For starters, he'd like to see the tax cuts President Bush implemented in August of 2003 made permanent. Those cuts, Weller claimed, created 4.1 million jobs.
"So it worked. It gave businesses and investors greater reason to invest and individuals greater incentive to invest in the retirement," Weller remarked.
Weller said that making that tax cut permanent - it was scheduled to be examined by lawmakers just before Katrina's landfall - would also allow Americans to invest more vigorously in their IRAs. And a broader tax reform package including a provision that encourages companies to automatically enroll their employees in a 401(k) would also expand retirement investing, particularly among young people who tend to unknowingly ignore employer-sponsored programs.
But the GROWTH Act (see MME 5/30/05), a bipartisan bill that would eliminate the tax on capital gains that are reinvested into the same mutual fund, is expected to be addressed by lawmakers in the very near future. A bill that has drawn tremendous support from the ICI in recent months, the GROWTH Act has the support of 32 members of the House. A version is due in the Senate "very soon," Weller said.
"More than 50% of all mutual fund investors are under the age of 45," Weller noted in his closing remarks. "So who will benefit most from expanded retirement opportunities: young families, young workers, the people who follow the Baby Boomers."
The annual ICI Tax & Accounting Conference, which this year is attended by an estimated 800 fund industry professionals, continues through Wednesday.