Vermont’s Rep. Peter Welch is asking the Treasury Secretary to block a pending change to the federal tax code he fears could hurt the state’s captive insurance industry.
In a letter to Secretary Henry Paulson, Welch says that if the change is implemented, it could damage Vermont’s economy and drive captive insurance companies overseas.
Vermont is home to about 580 captive insurance companies. The industry provides about 1,400 high-paying jobs and pays $22.8 million in state taxes.
Industry officials say the IRS rule change would prevent captive insurance company from deducting from their corporate taxes the value of the reserves they have set aside to pay claims.
Sens. Patrick Leah and Bernie Sanders, and Gov. Jim Douglas, are all on record opposing the tax change.