Foreign Insurers Mislead Congress on Tax Loophole, Says Coalition for a Domestic Insurance Industry

Expert Debunks Report Circulated by Offshore Interests

WASHINGTON--(BUSINESS WIRE)-- A tax expert has challenged a report circulated by lobbyists for foreign insurers, saying it misleads Congress about a bill that will increase U.S. competitiveness and recover billions in U.S. tax revenue. The bill (H.R. 3424), introduced by Rep. Richard Neal, will eliminate a loophole that allows foreign insurers to avoid billions in U.S. taxes by stripping their U.S. profits offshore to low-tax or no-tax jurisdictions.

In yesterday’s Tax Notes, David Rosenbloom, Director of the International Tax Program at New York University’s School of Law and former International Tax Counsel at Treasury, denounced the report for misrepresenting H.R. 3424.

Lobbyists for foreign insurers are circulating the flawed report, written by Gary Clyde Hufbauer, to Congressional members and staff. “The report is inaccurate and its core findings mischaracterize the Neal bill,” Rosenbloom said. In his response, Rosenbloom confirmed the bill does not violate U.S. tax treaties, citing a recent conclusion of the Staff of the Joint Committee on Taxation. The Staff has correctly observed that “payments leaving U.S. taxing jurisdiction may, in appropriate circumstances, consistent with U.S. tax treaties, be subjected by the United States to tax that would not be imposed on a payment to a U.S. person.”

In his analysis, Rosenbloom also observed that the election under the bill to be treated similarly to a U.S. company “should be sufficient by itself to ensure that the Neal bill is non-discriminatory.” Rosenbloom also dismissed any notion that the bill was protectionist, saying “it dissipates with the false claim of discrimination.” According to Rosenbloom, the United States clearly has the right to close a gap in the tax law currently favoring foreign-owned insurers over their domestic competitors.

In reaching his conclusions, Rosenbloom spelled out the key aspects of the Neal bill:

“Neal’s bill will level the playing field for U.S. insurers and capture billions in tax dollars currently being siphoned offshore,” Rosenbloom said. “It is fair to insurers, fair to insurance customers, and fair to U.S. taxpayers.”

The full text of Rosenbloom’s analysis may be viewed by clicking here. For more information, please visit www.coalitionfordomesticinsurance.com.

Coalition for a Domestic Insurance Industry
Andrew Shea, 240-482-0583

Source: Coalition for a Domestic Insurance Industry