Norton Bill for New Income Stream for D.C. to be Introduced This Week

October 3, 2011

WASHINGTON, DC -- Congresswoman Eleanor Holmes Norton (D-DC), Ranking Member of the House Subcommittee on Economic Development, Public Buildings, and Emergency Management, will introduce the District of Columbia National Disaster Insurance Protection Act this week. Norton's bill would make the District of Columbia an international financial center for catastrophic insurance reserves which insurers set aside to cover losses from natural disasters. Norton's bill would amend federal tax law to make the District a special tax jurisdiction where catastrophic insurance reserves and the investment income from these reserves are exempt from federal taxes. Because these reserve funds are subject to federal taxes, property and casualty insurers now hold billions of dollars of these reserves offshore, such as in Bermuda and the Cayman Islands, where they are not subject to federal taxes.

"My bill is particularly timely considering the earthquakes and hurricane that caused billions of dollars in damages this summer, and the record number of natural disasters throughout the U.S. this year," said Norton. "Retaining funds here in the U.S. would fuel both the local and U.S. economies, would provide the protection of U.S. laws for individuals and businesses with property and casualty insurance and would protect U.S. taxpayers, who would otherwise likely have to pick up the tab if there were a failure in reserve fund availability."

The Norton bill would help spur economic development in the District and the region because: (1) companies keeping their reserves in the District would be required to have a physical office here and employ a certain number of District residents, as they do in foreign jurisdictions, leading to increased income, sales and property tax revenue; (2) lawyers, accountants, actuaries, bankers, insurance consultants, and support personnel would be needed to serve these new insurance companies; (3) the District could charge a modest excise on the catastrophic funds and; (4) the District would derive increased tax revenue from the banks holding the funds. The Congresswoman said, "The District has become an international city and destination. Why wouldn't the country prefer those billions in reserves to be held here rather than offshore, especially today when the U.S. economy is suffering from global corporate placement of jobs outside the U.S.?"

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