Consumer insurance coalition warns that US businesses and consumers will be impacted by discriminatory tax
Washington, DC (July 9, 2015) — The Coalition for Competitive Insurance Rates (CCIR), the leading voice for continued and increased competition within the insurance industry, today remains cautiously optimistic of the Senate Finance Committee’s treatment of foreign affiliate insurance companies in corporate tax reform following the release of a final report by the International Tax Reform Working Group issued by Finance Committee co-chairs Rob Portman (R-OH) and Charles Schumer (D-NY). The report concludes that the Committee will “consider both sides’ arguments moving forward” in its treatment of foreign affiliate insurance. Changes in current treatment are opposed by business and consumer groups.
During a recent Capitol Hill panel briefing and discussion of how Congress should approach to international affiliate reinsurance, renowned economist Arthur Laffer stated that proposals that seek to deny a tax deduction for certain reinsurance premiums paid to foreign-based affiliates by domestic insurers violate “every principle of economics” by placing “a very high tax rate on a very small tax base.”
Laffer was accompanied on the panel by Tom Feeney, a former congressman and the current president and CEO of Associated Industries of Florida; Alan Cole, an economist at the Tax Foundation; and Timothy Keeler, an international trade partner at Mayer Brown LLP. R Street, a non-profit, non-partisan, public policy research organization, organized and moderated the panel.
“You try to do the best thing you can in terms of a policy and legislative perspective, and it’s almost always the unforeseen, adverse consequences that are much more dramatic than maybe some unforeseen benefits,” said Feeney, in reference to the proposals. “So it’s important that we recognize this would effectively be a $13 billion increase on the cost to consumers, depending on how exactly a proposal like this is structured.”
“It’s not about protecting the US tax base, it’s not about tax evasion, it’s pure and simple protectionism; it’s about throwing up a barrier at the border for domestic providers,” said Keeler, adding that “the biggest problem, from my perspective, with these proposals is that they violate US World Trade Organization obligations.”
CCIR is committed to continuing to work with Congress to safeguard against proposals that seek to deny a tax deduction for certain reinsurance premiums paid to foreign-based affiliates by domestic insurers.
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