Congress will have a fight on its hands if it goes ahead with legislation that would for the first time require pension plans to pay taxes on gains from their investments in gas and oil commodities, pension fund executives said.
“The reason pension plans are generally tax exempt is to encourage retirement plans, and this would discourage it,” Mr. Quinn continued. American Beacon oversees the $17 billion plans of American Airlines Inc., Fort Worth, Texas.
“We'll be engaged,” added Michael Griffith, coordinator of the Committee on Investment of Employee Benefit Assets, a Bethesda, Md.-based group that represents more than 115 of the nation's largest corporate pension funds.
At issue is S. 1588, the Stop Tax Breaks for Oil Profiteering Act of 2009, which was introduced by Sen. Ron Wyden, D-Ore., on Aug. 6.
Along with requiring pension funds and other tax-exempt institutions to start paying taxes on their energy-related commodity investment gains, the STOP Act also would force hedge funds and other speculators to pay ordinary taxes on their oil and gas trading profits. Those gains now can be taxed at the lower tax rate applicable to capital gains.
In an Aug. 6 statement on the Senate floor, Mr. Wyden said his legislation, which has been referred to the Senate Finance Committee, is needed to help rein in speculation in energy commodities that he said has driven up the price of oil for everybody.
“The legislation I am introducing today … will let some of the air out of this speculative balloon and help create a level playing field among companies participating in the commodities markets,” Mr. Wyden said in his statement.