ABIR Buoyed By Panel Findings
The Association of Bermuda Insurers & Reinsurers says the conclusions reached by a Congressional panel on the US deficit are positive for the island’s international insurance industry, welcoming the commission’s calls for lower corporate tax rates in the US as well as a revised tax scheme.
The panel, the National Commission on Fiscal Responsibility and Reform, unveiled a blueprint designed to tackle America’s exploding budget deficit problems. While 11 of the 18 panel members voted to support the final blueprint the commission developed, the vote was four short of the necessary supermajority necessary to put the report automatically before the Congress.
Bradley Kading, ABIR’s president and executive director of the Association of Bermuda Insurers and Reinsurers (ABIR), said the commission’s recommendations suggest that “corporate tax reform is politically feasible in the future”. Currently in the US, he said, the earnings of US-based companies are taxed even on their overseas earnings. Most other countries, he added, only tax the earnings of companies in their jurisdiction.
He went on to imply that corporate tax reform and a change in the US tax code to only tax American earnings of multinational companies based in the US means pressure would be lessened for increasing taxes on foreign insurers, such as the legislation proposed by Massachussetts Congressman Richard Neal, a powerful member of the House Ways & Means Committee. Aimed at closing the “so-called Bermuda loophole” in the US tax code. the Neal Bill — described as “draconian” by Mr. Kading – seeks to raise $17 billion over 10 years by disallowing the tax deduction for reinsurance between affiliated entities.
