Senate Passes Tax Cut Legislation Favored By Industry

NU Online News Service, Dec. 15, 3:54 p.m. EST

The Senate this afternoon passed tax cut legislation strongly supported by the property and casualty insurance industry–especially agents.

The vote on H.R. 4853 was 81-19.

House officials said action in that body is not likely until Thursday. A remaining question is whether House Democrats will seek to revise the legislation, especially the estate tax provisions, because they regard them as too generous.

The highlight of the deal is a two-year extension of the 2001 Bush-era tax cuts. This is estimated to cost $314.9 billion, according to a Dec. 3 study from the nonpartisan Congressional Research Service.

The proposed agreement would allow all businesses to expense 100 percent of their investments in 2011. The write-off would be retroactive to September 2010.

The Treasury Department has said this expensing provision could generate more than $50 billion in additional investment in the U.S. in 2011.

Reacting to the decision, the Independent Insurance Agents and Brokers of America (IIABA) lauded the Senate action.

"The IIABA is pleased with today's bipartisan actions in the Senate to extend the 2001 and 2003 tax rates," said Robert Rusbuldt, IIABA president and CEO. "Many small businesses, like the majority of IIABA agencies, pay taxes at individual rates and would be hardest hit at a time when our economy is still recovering from a recession."

Charles Symington, IIABA senior vice president of government affairs, said IIABA "calls on the House of Representatives to follow suit and pass the Senate language as quickly as possible with no changes to avoid a huge tax increase on the small businesses that are the backbone of our economy."

Included in the bill is a provision sought by the insurance industry that would extend deferral of taxes owned under so-called Subpart F. Unless Congress acts, insurance companies would be required to pay taxes earned by foreign subsidiaries of U.S. taxes even if that income was not repatriated to the U.S.

Tax payments have been deferred going back a number of years, according to industry officials.

The American Insurance Association voiced support for inclusion of this provision.

Allan J. Stein, AIA vice president and associate general counsel, said this provision "helps to level the tax playing field for U.S. financial services firms, including insurers, when they do business in new and expanding markets abroad, while adding an incentive for U.S.-based jobs to support these foreign operations."

The bill is the result of an agreement negotiated between the Obama administration and Republicans in Congress, with vice president Joseph Biden representing the administration.