Remember the mass outpouring of outrage a couple weeks ago when it emerged that House Republicans were planning to ditch the adoption tax credit in their tax reform bill? Remember how pro-life groups (and ordinary citizens) went totally ballistic, because nixing the adoption tax credit makes it much harder for people to adopt, thus potentially diminishing the pool of parents for babies that might otherwise be aborted?
Yeah… it turns out that the House trying to strip the adoption tax credit out was even more unnecessary than we thought.
In addition to the fact that the House tax bill was apparently loaded up with giveaways to salad dressing makers and tuna canners, it also preserved something called the “Bermuda reinsurer loophole.”
I know you’re excited to read about this “reinsurance” tax provision (nothing says sexy like “reinsurance” and “tax”), so I’ll keep this as simple as possible: The provision lets foreign insurance companies issue policies in America, and send the premiums to affiliated reinsurance subsidiaries without paying any US taxes along the way. To boot, this clever tax ploy is also being used as a tax dodge by a bunch of people who aren’t even insurers. All in, it’s estimated to be resulting in a loss of about $9 billion over a decade.
Maybe in and of itself, that bothers you, or maybe it doesn’t. Super #MAGA types (like a lot of House Republicans purport to be these days) probably aren’t thrilled about the idea that we’re giving offshore tax haven denizens a pass on US taxes (and that does kind of raise the question as to how the provision ended up in there—there seems to be a pretty limited, non-US constituency for this provision, and some main beneficiaries of it are major opponents of the President—but I digress).
In any event, here’s what should really irk you if you’re pro-life: The adoption tax credit was intended to be nixed in the House bill as a way of “enhancing” revenue at the same time that this loophole was being written into tax law. And in 2015, the adoption tax credit was worth a whole, puny $300 million a year.
That’s right. The House—and perhaps most specifically Rep. Kevin Brady, the Chair of the House Ways and Means Committee— was prepared to compromise on pro-life principles to “save” $300 million a year, when they could have just nixed the Bermuda reinsurance thing and “saved” $900 million a year. Heck, they could have tripled the adoption tax credit, nixed the Bermuda provision and still “saved” money.
Rep. Brady obviously got an earful about this before the House bill passed, and that’s why he stuck the adoption tax credit back in. But if the Senate passes a bill, there will be a huge amount of horse-trading in conference, with different credits and provisions moving in and out to try to formulate something that can pass both chambers.
If you feel strongly about all this, it wouldn’t be a bad idea to give Rep. Brady’s office a call. Assuming the Senate can even pass a bill, which is a questionable assumption these days, it would be nice if good stuff stays and bad stuff goes. He’ll be a deciding factor in all that.