U.S. insurers have slim chance to alter tax code
A coalition of U.S. insurers is calling on lawmakers to close a tax loophole that helps foreign insurers, and although it has won the support of presidential hopeful Hillary Clinton, it faces a harder task convincing others.
The coalition, led by William Berkley, chairman of a U.S. insurance company that bears his name, says foreign insurers are cutting their U.S. tax bills through reinsurance deals with affiliates in countries with lower tax rates. Berkley said the tax on such agreements must be raised to level the playing field, or else U.S. insurers may leave the country.
Despite quietly lobbying Capitol Hill over the past year, the coalition has not succeeded in getting a bill introduced by Congress. It recently ramped up efforts, including a $1 million donation by bond insurer MBIA Inc (MBI.N: Quote, Profile, Research), a coalition member.
The group has also hired Jon Talisman, an assistant secretary of tax policy in former President Bill Clinton’s administration, to lobby on its behalf.
But those who closely track tax developments say the group faces an uphill battle to win wider support.
Two similar measures over the past 20 years have failed to get a nod from lawmakers, who fear essentially raising taxes on foreign insurers would ignite a trade war with powerful European insurers and encourage some overseas insurers to stop writing policies in the United States.
And insurers in the U.S paydayloans. are posting strong profits, which makes it difficult for lawmakers to be sympathetic to complaints about competitiveness, or to view threats to leave the country as credible.
For U.S. insurers to move their headquarters to another country could leave them with a large capital gains tax bill, Fitch wrote in a recent report.
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