“Availability of insurance and reinsurance coverage for catastrophe risk in the U.S. would be reduced, which would result in higher premiums for U.S. businesses and consumers,” the July 22 letter states. “Moreover, the departure of non-U.S. operators could lead to job loss for many U.S. citizens employed by these companies.”
The commissioners also warned that the legislation could run afoul of the World Trade Organization (WTO) agreement that stipulates foreign insurers and reinsurers under the WTO be treated no less favorably than their U.S. counterparts.
Neal’s bill seeks to block companies from taking advantage of tax laws that allow them to move income offshore and avoid paying U.S. taxes. The commissioners support the measure’s intent, but remind Neal that firms within their jurisdiction pay on average a 25 percent tax rate.
“We believe there are less restrictive ways of achieving the goals you seeks,” the letter states, adding, “[We] would like to urge you to work with your colleagues in the U.S. House Ways and Means to revise your legislative proposal to directly target tax evasion, without penalising European reinsurers.”
Neal chairs the Ways and Means Select Revenue Measures Subcommittee and on July 14 hosted a hearing on the reinsurance issue. He used his opening remarks at that hearing to mention the intense lobbying effort to change his bill.
“To say this issue has spawned a furious lobbying campaign would be to put it mildly — you can watch the competing videos on YouTube,” he said, adding, “We need to ensure whatever we do is right for taxpayers, consumers and the Treasury.”