Lawyer proposes making DC into a tax shelter for insurers
A top US lawyer has proposed turning the District of Columbia into a tax shelter for insurance companies in a bid to lure funds from offshore centres and create new jobs in the area.
Lawrence Mirel, an attorney with Wiley Rein LLP, came up with the idea when serving as insurance commissioner in the Anthony Williams administration, and started touting the proposal about a year ago, attracting interest from Delegate Eleanor Holmes Norton and Mayor Adrian Fenty, while the District of Columbia's office of the chief financial officer has carried out preliminary studies on it.
But the concept came to the fore last week at a forum in Adams Morgan when Council of the District of Columbia's chairman Vincent Gray was asked how he would solve unemployment in the District, according to a report in the Washington City Paper.
Currently, about $60 billion of American insurance companies' reserves for natural disasters is sitting in banks in Bermuda and the Cayman Islands due to a competitive tax advantage, Mr. Gray said, adding that if Congress created similar tax conditions for insurers in the District, some of those funds would go there instead and a significant number of new jobs would be created.
"The more I got into it, the more intriguing it became," Mr. Mirel told the Housing Complex. "So far, nobody has said no."
Mr. Mirel said that the idea should gain traction in Congress as the lawmakers start to worry about hurricane season and the fact that all of the US's insurance reserves are sitting in another country not subject to US regulation.
He said it would be fitting to bring more of the US's financial industry to Washington.
"We're the only national capital in the world that isn't a financial centre," he said. "I've never understood why London is still the dominant financial capital in the world. That was last century!"
Mr. Mirel's proposal would see Congress amend the US tax code to exempt from federal taxation money set aside in designated "catastrophe reserve funds" by qualified insurance companies based in the District of Columbia
The proposal would allow the US to compete with offshore jurisdictions to keep insurers' catastrophe reserves in the country, by providing tax incentives for such funds to be maintained in the District of Columbia, where Congress has exclusive legislative authority.
These reserves would provide additional economic security for US jurisdictions subject to natural catastrophes, as well as providing revenue and jobs to the District of Columbia and the surrounding region, the proposal detailed.