WASHINGTON, May 15, 2015 — The Coalition for Competitive Insurance Rates (CCIR), the leading voice for continued and increased competition within the insurance industry, today endorsed a newly-released report by Laffer Associates which finds some provisions of past comprehensive corporate tax reform proposals and proposals under review by both the Senate Finance and House Ways and Means Committees to simply be “bad tax reform.”
The study, “Do We Want Special Interest Trade Protectionism in the Tax Code?” was published by top economist Arthur Laffer. The report argues that attempts to deny a tax deduction for certain reinsurance premiums paid to foreign-based affiliates by domestic insurers would result in economic damage to consumers and businesses by raising the cost of their insurance. The proposals targeted by Laffer were included by President Obama in his FY2016 budget proposal and previously introduced by US Sen Robert Menendez (D-NJ), US Rep. Richard Neal (D-MA) and US Rep Bill Pascrell (D-NJ) in the last several sessions of the US Congress.
“That reduced supply and higher cost of such insurance would mean less volume of insurance sold and bought. That reduced insurance coverage would affect the economy more generally,” the report concludes. “Overall, that means reduced GDP, jobs, wages and income.”
The study also finds that the Obama-Menendez-Neal proposal “involves trade protectionism implemented through the tax system, done at the behest of domestic insurers and reinsurers seeking protection from foreign competition,” in violation of several US trade agreements and international tax treaties.
The study urges Congress to develop a plan for corporate tax reform that provides “an equal basis for all industries, following sound, uniform principles for defining the corporate tax base, and making the tax code more neutral and internationally competitive, particularly with lower marginal tax rates.”
In response to the report, former congressman and current President and CEO of Associated Industries of Florida Tom Feeneyissued the following statement on behalf of CCIR:
“Efforts to reform the tax code by imposing additional taxes on international affiliate insurers and reinsurers would force the industry as a whole to reduce the size and scope of their US offerings, making coverage during the next hard market less available or unaffordable for the companies and consumers that depend on it the most. And, when higher insurance rates are passed down to policyholders, economic growth is stalled, a glaring fact routinely overlooked by policymakers in Congress.”
“The unintended consequences of a tax on foreign affiliate insurers and reinsurers far outweigh the benefits. The only potential winners are the select few firms that stand to profit from decreased market competition. A robust insurance market, open to as many competitors as possible, is essential to protecting consumers and allowing businesses to operate and grow. We hope Congress listens to the clear message of this report and works to create a tax reform proposal that is without bias and uniform in its treatment of national and international industry.”
The Coalition for Competitive Insurance Rates (CCIR) is made up of business organizations, consumer advocacy groups, insurers and their associations. For more information on CCIR, please visit www.keepinsurancecompetitive.com.
Category: Press Releases