Coalition: Tax Cuts and Jobs Act Working for America
WASHINGTON, D.C. (May 9, 2018) – The Coalition for American Insurance finds more welcome news that the Tax Cuts and Jobs Act (Pub. L. No 115-97) is continuing to work as intended, reversing the erosion of the U.S. tax base and loss of taxes on U.S. generated insurance business, as evidenced by changes to internal company reinsurance agreements at a number of foreign owned groups. For example, Arch Capital Group recently disclosed that it has canceled its prior internal company reinsurance arrangement. Before the new tax law, these affiliated reinsurance arrangements were used to send business from the United States to foreign countries in order to take advantage of an almost zero percent corporate tax rate. As a direct result of the new tax law’s Base Erosion and Anti-Abuse Tax (BEAT) any tax advantage by foreign based insurers in offshoring reinsurance on U.S. generated business has been significantly reduced, effectively eliminating the competitive advantage over U.S. Companies, and helping stem U.S. Base Erosion.
A statement from the Coalition follows:
“More welcome news and clear evidence that the Tax Cuts and Jobs Act is working as intended in the insurance marketplace. Congress recognized the problem the Insurance Tax Haven loophole created by allowing foreign-based insurers to do business in the U.S. – but avoid paying U.S. taxes – and took important steps toward eliminating the tax advantage. Foreign-based insurers now compete on a more level playing field with American companies on U.S. business, making the insurance market more competitive, and benefiting consumers. Moreover, reinsurance capacity has remained strong and pricing competitive. The Coalition again thanks Congress for recognizing this problem and addressing it. We are pleased with the continuation of this positive trend for the U.S. insurance industry and the benefit to consumers, employees and the U.S. economy.
ABOUT THE COALITION –
The Coalition for American Insurance consists of major U.S.-based insurance groups that employ hundreds of thousands of people within the United States. Coalition members provide millions of Americans with financial protection from unpredictable risks and pay substantial amount of federal, state and local taxes. The Coalition is working for a level playing field and tax fairness for U.S.-based insurers and their consumers and employees by closing a federal tax loophole that has allowed foreign-based insurers to avoid paying U.S. taxes.