By Jay Heflin - 06/07/10 04:39 PM EDT
Rep. Richard Neal (D-Mass.) and Sen. Robert MenendezRobert MenendezTim Kaine backs call to boost funding for Israeli missile defense GMO labeling bill advances in the Senate over Dem objections Overnight Finance: Trump threatens NAFTA withdrawal | Senate poised for crucial Puerto Rico vote | Ryan calls for UK trade deal | Senate Dems block Zika funding deal MORE (D-N.J.) have championed the idea of preventing foreign-based companies from avoiding U.S. taxes by shifting reinsurance premiums offshore. The two argue that the strategy disadvantages domestic companies.
The Coalition argues that by violating trade rules, the legislation will force foreign-based companies out of the U.S. insurance market, which will make it harder for domestic businesses to find coverage.
"The effort to create a punitive tax regime on international carriers will result in less insurance capacity and increases costs for U.S. consumer," the group writes. "A robust insurance market open to as many competitors as possible is essential to consumers. This is particularly understood by those in states more exposed to natural disasters where there has been a crisis of insurance availability and affordability."
The group states that insurance regulators in states hardest hit by natural disasters oppose the tax. Those states include Louisiana, Mississippi, North Carolina, South Carolina and Florida.
Taxing foreign reinsurers was recently proposed to help pay for the so-called tax extender bill. The measure would have replaced the tax increase on carried interest, over which senators from both parties have expressed concern.
House leaders didn't include the measure in their legislation. But now the extender bill awaits action in the Senate, where it could be amended.