Florida Chief Financial Officer Jimmy Patronis is urging leaders across the state to reject a provision in President Joe Biden‘s Made in America Tax Plan (MATP) that would be catastrophic for the insurance markets.
Addressing the Enterprise Florida (EFI) September board meeting on Wednesday, the CFO took aim at the Biden administration’s tax plan, criticizing the proposed $3.5 trillion Public Infrastructure Bill that includes a “hurricane tax” that will increase insurance premiums on all Florida homeowners during climate-related catastrophes.
“I was proud to join the EFI Board of Directors meeting in Sarasota today. I want to take this opportunity to warn all Floridians about a provision buried within Joe Biden’s ‘Human Infrastructure’ bill that creates a hurricane tax that will increase insurance premiums on all Florida homeowners. These tax hikes are sure to drive up insurance rates, run domestic carriers out of Florida, and what’s worse – make Floridians more vulnerable to hurricanes. We must let Washington know that anything that increases premiums on Floridians is a non-starter,” Patronis said.
The MATP provision, which is being debated in Congress and contains corporate-related tax increases,” has gained traction in recent weeks as parties line up to push back against Biden’s plan. Despite the administration claiming these new taxes will incentivize businesses to reinvest in America, opponents warn the taxes will ultimately be a burden for the state’s residential and commercial property owners.
A recent report from the non-partisan R-Street Institute estimates that insurance premiums nationwide will increase between $10.8 billion to $20.3 billion a year if the Made in American Tax Plan is signed into law. Additionally, the nonpartisan public policy research organization predicts that the provision in Biden’s tax proposal will raise insurance costs for all U.S. consumers, ranging from insurers and businesses to homeowners and renters — with the increase being felt most in the Sunshine State. The group forecasts that Florida families would see an annual total premium increase of up to $1.62 billion, which equates to an estimated cost increase of more than $300 per family.
“The first rule will directly increase the cost of providing insurance by increasing the tax burden on U.S. insurers. The second provision will increase the cost of insurance indirectly, by increasing the tax expenses of international reinsurance companies, which provide much of the capital for U.S. risks and are often located in low-tax jurisdictions,” the analysis states.
The tax provision in particular, which critics have dubbed a “hurricane tax,” would set a higher corporate tax rate for insurers and reinsurers — resulting in an increased costs for consumers. R-Street Institute says the label fits because the provision will significantly impact storm-battered states like Florida and Texas.
“As these tax increases are passed through to consumers, they will effectively tax everyone who buys insurance, regardless of income,” R Street Institute Director of Finance, Insurance and Trade Policy Jerry Theodorou said. “Though these changes will affect the cost of insurance for all U.S. consumers, the price increases will be largest for those living in areas exposed to catastrophe losses (e.g., hurricanes, earthquakes, tornadoes, floods and wildfires).”