WASHINGTON, D.C. (November 27, 2017) – The Coalition for American Insurance voiced support today for a recent Wall Street Journal editorial that focused on the importance of reducing base erosion through tax reform. The original editorial can be viewed HERE. The text of the Coalition letter is below.
Senate’s Take on Tax: Best to Reduce Gaming
WSJ, Letter to Editor, November 27, 2017
The current tax code is full of loopholes that allow foreign-based companies operating in the U.S. to avoid paying taxes here on their U.S.-generated business.
The editorial “Reducing Corporate Tax Games” (Nov. 20) rightly recognizes the importance of dealing with base erosion in tax reform. The current tax code is full of loopholes that allow foreign-based companies operating in the U.S. to avoid paying taxes here on their U.S.-generated business. Meanwhile, U.S.-based companies are competing for the same business but paying full freight.
This unequal tax treatment creates winners and losers and gives companies that invert to low or no tax jurisdictions (tax havens) a very real and significant competitive advantage in the marketplace. From the perspective of U.S.-based insurers, this is a real problem. Foreign-based insurers are currently allowed to strip profits generated in the U.S. to overseas affiliates and avoid paying any taxes on that income. That’s a glaring loophole that has cost U.S.-taxpayers nearly $9 billion over a decade.
The Senate’s approach to closing this loophole is indeed the better one than that approved by the House, whose weak provisions undermined its own professed goal to stop inversions. The Senate approach should carry the day. Base erosion is a very real problem, particularly in the insurance industry. Comprehensive tax reform is the right place to deal with it.
William R. Berkley
On behalf of the Coalition for