US President Barack Obama yesterday proposed a move that would increase the US tax paid by some Bermuda-based reinsurers and clamp down on multinational companies using offshore entities for “earnings stripping”.The moves were outlined in the President's Fiscal Year 2012 Budget plan, released yesterday.One of the revenue-raising measures proposed was to “disallow the deduction for excess non-taxed reinsurance premiums paid to affiliates”.A similar move was proposed in last year's US Budget plan. This year, however, the revenue target is higher $2.6 billion over 10 years, compared to about $500 million in last year's proposal.Obama's proposal would still be much less expensive to non-US reinsurers than the Neal Bill, a proposal along similar lines proposed by Congressman Richard Neal, which would seek to raise about $2 billion per year.The measure would not single out Bermuda, as it would apply to all non-US insurance groups.If the plan becomes law, Bermuda groups with US affiliates who cede back some of the US insurance premiums to the parent company in the form of reinsurance contracts can expect to pay more tax.Bermuda market companies who would have most to lose from the change, according to analysts, include Ace, XL Group and Arch Capital Group.The earnings stripping move would impact some multinationals who channel some profits through entities in low-tax jurisdictions including Bermuda to trim their US tax bill.The move was yesterday condemned by the Coalition for Competitive Insurance Rates (CCIR), one of whose members is the Association of Bermuda Insurers and Reinsurers (ABIR).John Phelps, director, business risk solutions, Blue Cross and Blue Shield of Florida, Inc and board liaison, Risk and Insurance Management Society, Inc, External Affairs Committee, quoted in the CCIR statement, said: “Instituting this tax would significantly reduce America's ability to manage volatile, catastrophic insurance risk, whether it involves natural disasters like hurricanes or man-made ones like terrorist attacks.Bill Newton, executive director of the Florida Consumer Action Network, said: “US consumers, whether they know it or not, rely on the international insurance market to protect their homes and businesses.“Our legislators have a responsibility to make sure that their constituents can afford to conduct business and protect their families. Supporting this budget proposal would be a violation of that responsibility.”CCIR and a number of its allies yesterday sent a letter to the chairmen and ranking members of the Senate Finance Committee and House Ways and Means Committee detailing the negative consequences of this proposal.The signatories included ABIR and Bermuda market players XL America, Arch Capital, Ace Group and Argo Group, as well as a number of consumer groups.The letter argued that the proposal “essentially imposes an isolationist tariffon international insurance companies doing business in the US” and added that it would “violate World Trade Organisation commitments”.It went on to point out that some of the same US insurers who supported the measure were opposing a measure that would restrict affiliate reinsurance in Brazil.“Penalising the efficient economic allocation of capital by internationally diversified companies is not in the best interests of the US economy; it will lead to decreased capacity and upward pressure on rates,” the letter added, before concluding that the proposals are “isolationist measures aimed at benefiting some competitors in the market at the expense of others”.The President's move is part of efforts to cut the US deficit by $1.1 trillion over the next decade. The $3.73 trillion budget was sent to Congress yesterday.