Disallowing the tax deduction for reinsurance between affiliated entities would have a "detrimental effect on U.S. consumers" and lead to higher insurance premiums, the head of a trade group representing European carriers warned.
In a letter to members of Congress, Tommy Persson, president of the CEA–a European insurance and reinsurance federation–made the comments in response to proposals in Washington designed to restrict the ceding of premiums to offshore affiliates.
One proposal by the Obama administration is projected by the Joint Tax Committee to raise $2.3 billion in additional revenues over 10 years. Another proposal, by Rep. Richard Neal, D-Mass., is projected to raise $17 billion over 10 years.
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