FERRARA: Stop The Bermuda Triangle Special-Interest Tax Loophole
President Trump’s tax reform cut taxes for working people, and for their employers to create jobs. For special interests, like foreign insurance companies, Trump campaigned on closing loopholes, which his tax reform did.
This is why his tax reform, and deregulation, suddenly sparked such a historic economic recovery, creating millions of new jobs for blue collar workers and the middle class. The stock market boom anticipated that starting on Election Day, 2016.
These policies are why Trump today can boast of achieving the lowest African American unemployment in American history, the lowest Hispanic unemployment in American history, and the lowest Asian unemployment in American unemployment. These are the reasons why Trump today is leading the most inclusive economic recovery in American history.
Yet, the foolish Fake News media continues to broadcast their goon squad commentators referring to Trump as somehow “racist.” Blue collar workers and working people in 2016 wanted a change in what even Obama’s apologists called “secular stagnation.” But the Democrats and their increasingly nutty leftist extremists don’t get that to this day.
In the 2017 tax reform bill, President Trump eliminated what was known as the Bermuda Triangle insurance company tax loophole, because it made the U.S. taxes of foreign insurance companies disappear.
These foreign companies would sell insurance in the United States, then buy reinsurance from affiliates in low-tax Bermuda, which was considered “affiliate reinsurance” under the U.S. code, making the whole transaction tax free on what they collected in the United States.
Affiliate reinsurance shifts the insurance responsibility to the affiliate company. It is a common practice in the insurance business worldwide. To spread and diversify the risk.
That left foreign insurers with an immense tax advantage over their American insurance competition. The Bermuda Triangle tax loophole was an enormous thorn in the side of the American insurance industry.
But Trump’s America First philosophy prevailed to eliminate that perverse foreign insurance company favoritism. It restored American competitiveness, while increasing revenues that could be used to cut taxes for American workers, the very people who put Trump in the White House over Hillary.
Eliminating the Bermuda Triangle loophole raised $9 billion in U.S. revenue, which was used to cut income tax rates for middle-class workers in the United States in the tax reform. The 2017 tax reform Republicans passed with no Democrat votes cut the income tax rate paid by single workers earning $9,525 to $37,500 by 20 percent, as reported by the Tax Foundation.
And it did the same for middle-class couples earning between $19,050 and $77,400. The 2017 tax reform also cut income tax rates for singles making $38,700 to $93,700, and for couples making $77,400 to $156,150.
That cannot be disputed, because the numbers are directly in the legislation itself, as passed and signed by President Trump. Trump delivered in cutting income taxes for the middle class, in part by raising taxes on foreign insurance companies.
But now the foreign insurance companies are back, asking for a reenactment of the Bermuda Triangle loophole through their high priced lobbyists. Trump should stand firm against this perverse foreign insurance tax favoritism. Standing firm against it would be consistent with his foreign trade policies, where he is busily renegotiating deals that he feels favor foreign parties over American companies on trade.
There is no good reason why the U.S. income tax code should favor foreign insurance companies over American insurers. Trump’s America First philosophy has benefitted working people the most, the very people Democrats used to represent, but have now forgotten for what they see as their more hip, Obama-era, Rainbow coalition.
Peter Ferrara, senior policy adviser to the FAIR Energy Foundation and to the National Tax Limitation Foundation, teaches economics at King’s College in New York City. He served in the White House Office of Policy Development under President Reagan and as associate deputy attorney general of the United States under President George H.W. Bush.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.