Hillary Clinton targets ‘Bermuda reinsurance loophole’
Democratic presidential hopeful Hillary Clinton wants to end what she calls “the Bermuda reinsurance loophole” as part of her tax program outlined Tuesday.
In a factsheet entitled “Investing in America by Restoring Basic Fairness to Our Tax Code” posted on her campaign website, Ms. Clinton says that “high-income money managers have used loopholes related to foreign reinsurance — often located in Bermuda — to avoid paying their fair share.”
Ms. Clinton does not go into detail about how she would deal with the offshore reinsurance, but cites in a footnote a 2014 report by the staff of the Joint Committee on Taxation regarding hedge fund reinsurance that says “the establishment of offshore businesses that reinsure risks and that invest in U.S. hedge funds has been characterized as creating the potential for tax avoidance.”
“During this election campaign in the U.S., it would be helpful for the political candidates to understand that Bermuda’s insurance industry comprises the same companies that paid nine percent of 9/11 claims,” said Bermuda Business Development Agency CEO Ross Webber on Bernews.com news website on Wednesday. “Anyone trying to convince the American public these very real companies, with bricks-and-mortar and thousands of dedicated employees—including nearly 17,000 in the US—are simply tax avoidance vehicles, is neglecting the business, economic and social reality.”
She also cites money managers as taking advantage of “complex derivative trades to lower their tax bill.”
The former secretary of state says that she would “build on proposals from both Democrats like President Obama and Republicans in Congress to close down these two loopholes.”
In addition, Ms. Clinton calls for closing “the ‘Romney Loophole’ that allows sheltering multiple millions in retirement accounts.”
Citing data from the Government Accountability Office, Ms. Clinton says that about 1,000 taxpayers have accumulated close to $100 billion in tax-preferred retirement accounts, with balances of more than $10 million per taxpayer.
Ms. Clinton says she “believes that we should encourage robust retirement savings by American families — but that retirement accounts should not become a shelter from taxation for the most fortunate” and says she would build on proposals by President Obama in calling for closing down the so-called ‘Romney Loophole’ by limiting the ability of the very wealthiest to game the system by sheltering large incomes in tax-preferred accounts”.
