Made in America Tax Plan Causes Concerns in Florida
The “Made in America” tax plan is drawing considerable opposition from observers familiar with Florida’s property insurance market. Its provisions labeled Stopping Harmful Inversions and Ending Low-tax Developments (SHIELD) are intended to close loopholes allowing corporations to avoid taxes through multi-national business structures. The proposal would establish a global minimum tax of 15 to 21%.
The R-Street Institute has estimated a global minimum tax in this range would increase Florida property insurance premiums between $639 million to $894 million. These increased costs would be borne by consumers who are already seeing significant yearly increases due to, among other things, rising losses and loss adjustment expenses associated with inflated and litigated insurance claims.
Florida has the largest natural catastrophe exposure in the country. The burden of increased taxes therefore would be especially significant for Floridians. Beyond just premium increases, imposing these additional costs on Florida’s property insurance system would place further stress on capital. This in turn reduces the availability of coverage. Florida currently is experiencing a contraction of private market capacity, and the state’s residual market Citizens Property Insurance Corporation is seeing a significant spike in its policy count. This will only get worse if federal policymakers impose additional costs burdens on this segment of the market.