Former Vice President Joe Biden could cost insurers significant cash if he wins the election, thanks to the risk of higher tax bills stemming from his proposed changes to the corporate tax structure, an S&P Global Market Intelligence analysis has concluded.
S&P cites three particular elements of concern in the proposals, which Congress would have to approve:
Corporate tax rate hike to 28 percent from 21 percent. The existing rate has been in place since the 2017 Republican tax overhaul.
GILTI Doubling. A Biden administration would push to double the tax rate to 21 percent from 10.5 percent on Global Intangible Low-Tax Income, or GILTI – earned by foreign subsidiaries of U.S. companies.
New alternative tax. Biden would apply a minimum tax rate of 15 percent on book income for corporations with more than $100 million in annual net income. According to the Tax Foundation, an independent tax policy nonprofit organization cited in the S&P report, this minimum tax would serve as an alternative tax, where corporations pay the greater amount, either the minimum or their normal corporate income tax.
For insurers, at least, S&P concluded that the proposals don’t add up, leaving them with a big risk of higher tax liabilities.
Still, there are a number of unknowns at play, such as how book income will be determined in any tax law changes, the report noted.
The full S&P report can be accessed at this link.
Source: S&P Global Market Intelligence