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It looks like D.C. may actually be moving toward an idea proposed by an insurance commissioner from the Mayor Anthony Williams administration, and picked up by Mayor Vince Gray earlier this year: The District can serve as a tax shelter for catastrophe insurance companies that currently keep their dollars ($60 billion of them!) offshore in countries like Bermuda where they aren’t subject to federal tax.
Del. Eleanor Holmes Norton is introducing a bill this week which, according to the release, would create jobs and increased tax revenue by encouraging insurance companies to set up shop in town. Just as they do in Bermuda, insurance companies would have to open offices and hire local employees to handle administration. Norton says there would also be a bump in tertiary employment as accountants, bankers, consultants and actuaries would be needed to support the companies. And taxes would still figure into the equation. The District can collect a “modest” excise tax from the companies, and the local banks holding the funds would also be taxed on them.
The only catch? The tax shelter plan may not make statehood advocates happy, since the law only works as long as the District stays a district. Federal income tax—-the thing keeping these companies offshore—-can only be done away with if Congress is in full control of a jurisdiction.