The Obama administration's 2012 budget proposal has reopened the debate over taxing certain reinsurance premiums ceded to foreign insurers by their U.S. affiliates.
The administration's plan would tax these premiums to a greater extent than a similar plan contained in the 2011 budget proposal. The administration projected the tax to raise $2.6 billion over 10 years, compared to the 2011 plan that would have raised $519 million in additional revenue.
But the administration's planned tax revenue from the plan is still far less than the taxing approach supported by Rep. Richard Neal, D-Mass. His proposal, which would disallow a deduction for "excess non-taxed reinsurance premiums" paid by the U.S. units of offshore insurers to offshore reinsurance affiliates, was projected to raise $17 billion over 10 years.
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