WASHINGTON--(BUSINESS WIRE)--The Coalition for a Domestic Insurance Industry announced its strong support for (H.R. 3157 and S. 1693), important bicameral legislation introduced today by Congressman Richard E. Neal, ranking member of the House Ways and Means Select Revenue Subcommittee, and Senator Robert Menendez, a member of the Senate Finance Committee. The proposed legislation would close the current tax loophole permitting foreign-controlled property and casualty (P&C) insurers to avoid U.S. tax by stripping income generated in the United States into tax havens. Closing this loophole will benefit consumers by recapturing nearly $12 billion in revenue for the U.S. Treasury over a ten-year period, without affecting insurance prices or availability.
“We urge the Joint Select Committee to incorporate the proposed legislation as part of its deficit reduction plan. Congress never intended to give a preference to foreign-controlled insurers over domestic insurers. Closing unintended loopholes to recover lost revenue is one of the best ways to reduce the Federal deficit. Doing so without hurting the pocketbooks of American taxpayers, while staunching the flow of capital overseas and restoring competitiveness for this important domestic industry, is a win for all.“ stated William R. Berkley, Chairman and CEO of W. R. Berkley Corporation.
The Coalition commends Congressman Neal and Senator Menendez for working with the tax experts at the Treasury Department to develop a balanced approach that addresses concerns with prior versions of the bill, while still effectively closing this loophole and providing a level-playing field for U.S. insurers. The legislation is consistent with tax treaty and trade obligations. Because the legislation does not impact third party reinsurance, it would have no impact on the cost or availability of insurance, including catastrophe coverage in coastal states.
The revised bill will effectively defer the deduction for reinsurance premiums paid to a foreign affiliate, if the premium is not subject to U.S. tax. Foreign-based insurers will not be disadvantaged as the legislation allows them to elect to be taxed similarly to a U.S. company on the income from affiliate reinsurance transactions. The legislation also allows for a tax credit to offset any foreign taxes paid on such income, to prevent double taxation.
Copies of the bill will be posted to the Coalition website as they become available.
The Coalition for a Domestic Insurance Industry represents thirteen U.S.-based insurance groups with more than 150,000 employees in offices located throughout the United States. Collectively, we pay billions of dollars in taxes, invest significantly in the municipal bond market, and offer millions of U.S. individuals and businesses financial protection from unpredictable risks. For more information, please visit: www.coalitionfordomesticinsurance.com