Democratic presidential hopeful Hillary Clinton, as part of a broad plan to boost the fortunes of U.S. workers, if elected would clamp down on tax benefits to foreign insurers doing business in the United States, she said.
Under a plan referred to as an “insourcing” agenda released late on Wednesday, Clinton proposed a wide range of initiatives to create $7 billion a year in new tax benefits and investments for firms that create U.S. jobs, and to help domestic insurers by cutting a benefit to foreign insurers.
Specifically, Clinton would “eliminate the unfair advantage that foreign insurers located in tax havens have against U.S. insurers competing for U.S. business,” according to a statement on the proposal.
Brian Deese, a Clinton economic adviser, said at issue is the ability of foreign insurance companies writing business in the United States to cut their tax bill through reinsurance arrangements in a “tax haven.”
Clinton added the issue to her agenda as a coalition of U.S. insurers ramps up its effort to convince legislators to close what they call a tax loophole that allows foreign insurers with U.S. operations to cut their income tax through offshore reinsurance arrangements.
“The Coalition for a Domestic Insurance Industry” is a 14-member group that includes W.R. Berkley Corp., Ambac Financial Group Inc., American Financial Group, Inc, Berkshire Hathaway, the Chubb Corp., EMC Insurance Companies, MBIA Inc. and Hartford Financial Services Group.
Clinton’s economic policy advisers did not consult with the coalition on this issue, Deese said.
In a letter last year to the House Ways and Means Committee, the coalition called on legislators to adjust the tax code that applies to certain transactions involving the U.S. operations of foreign insurers or there would be a risk that “foreign domiciled insurers will continue to use their tax advantage to gain a greater share of the U.S. insurance market.”
Coalition spokesman William Berkley told Reuters in an earlier interview that his group proposes a change to “level the playing field” between U.S. insurers and foreign companies with U.S. operations, so “the tax rate (would) be adjusted so they are taxed more appropriately on (their) domestic business.” Under a reinsurance agreement, the reinsurer assumes some of the risk in policies that an insurer has already sold to corporations and individuals.
(Reporting by Lilla Zuill; Editing by Brian Moss)
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