House Ways and Means Committee Members Nancy Johnson (R-Conn), Richard Neal (D-Mass) and Robert Matsui (D-Calif) have introduced legislation to close what they allege is a “tax loophole that allows insurers based in foreign tax havens to shield up to $7 billion annually from federal income tax.”
The measure is specifically aimed at U.S. companies who have recently moved their headquarters off shore to Bermuda to avoid tax liability. “This disturbing trend represents a double whammy for the American taxpayer,” Johnson and Neal said in an announcement. “It not only deprives our country of tax revenues, but it gives foreign companies an unfair advantage over U.S.-owned companies and their workers.”
The response from ACE Ltd., the biggest Bermuda-based insurer, came the same day. “The Johnson/Neal legislation is pork barrel politics at its worst. It would favor a few Northeastern U.S. insurance companies but jeopardize the ability of the industry to meet the capacity needs of the domestic market, particularly with respect to coverage for hurricanes, floods and other natural disasters,” said a company announcement.
ACE attacked the Bill as a protectionist measure, which, in light of recent U.S. efforts to open Chinese and Japanese markets to insurers, sends a “contradictory message to allies and competitors abroad.”
The company attacked the $7 billion figure as “not true,” citing a Treasury spokesperson, who said that no “estimate regarding revenue loss” has been made.
“ACE Limited strongly opposes the Johnson/Neal bill and urges Congress to strongly consider tax, trade and capacity issues that would be negatively impacted by passage of this bill,” the announcement concluded.
Was this article valuable?
Here are more articles you may enjoy.