Thirty-one business organizations, consumer advocacy groups, insurers and their associations today penned a letter to the leadership of the Senate Finance and House Ways and Means Committees, expressing concern over the latest discriminatory reinsurance tax proposal found in the president’s newly released FY 2016 budget and calling for the committees’ keen attention to the matter. The full letter, which was sent on behalf of the Coalition for Competitive Insurance Rates, can be read here.
A proposal in President Barack Obama’s FY 2016 budget seeks to deny a tax deduction for reinsurance premiums paid to foreign affiliates by domestic insurers. The proposal closely resembles legislation introduced in Congresses by US Representatives Richard Neal (D-MA) and Bill Pascrell (D-NJ) and Senator Robert Menendez (D-NJ) that would drastically raise insurance rates across the country. The President’s budget proposal and the Neal-Pascrell-Menendez legislation would impose an unnecessary and costly tariff on the companies that help spread insurance risks globally. This ability to spread risk has been especially beneficial for consumers and businesses in areas subject to hurricanes, earthquakes, crop failures and other forms of disaster.
More than 100 independent experts, state government officials, business owners, and associations have publicly filed opposition letters to these tax proposals. Additionally, two economic research firms, the Tax Foundation and the Brattle Group, have published independent studies pointing out the potential economic consequences of the proposals.