The American Council of Life Insurers (ACLI) is backing legislation it says would eliminate an antiquated tax code provision that damages the competitiveness of U.S. life insurance companies.
The legislation, H.R. 3399, was introduced into the House by Reps. John Larson (D-Conn.) and Patrick Tiberi (R-Ohio).
“This outdated quirk in the tax code imposes an expensive and unnecessary burden on affiliated groups simply because one member is a life insurer,” Frank Keating, president and CEO of ACLI said in a statement. “This burden does not apply to any other business either in the U.S. or overseas. The result is that life insurer-related groups must overcome a needless barrier when they compete with other groups in the global marketplace. This harms their competitiveness and offers no benefit to consumers.”
Under current law, which came into existence in the early 1900s, affiliated groups suffer a tax penalty when at least one member of the group is a life insurer.
“Even though all life insurance companies in the U.S. are now taxed on an income base equivalent to that of other corporate taxpayers, the life insurer tax penalty remains,” Keating said. “Modernizing this punitive tax provision would enhance competition in the financial markets and ultimately benefit both policyholders and shareholders.”
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