H.R.1070 - Restoring Competitive Property Insurance Availability Act (119th Congress)
Summary
H.R.1070, the Restoring Competitive Property Insurance Availability Act, proposes an amendment to the Internal Revenue Code of 1986. The amendment aims to exclude certain income from gross income for insurance companies providing real property insurance in areas affected by federally declared disasters. This exclusion applies for a period of five taxable years following the disaster incident date.
Expected Effects
The bill intends to incentivize insurance companies to provide coverage in disaster-prone areas by reducing their tax burden on income derived from real property insurance. This could lead to increased availability and affordability of insurance in these regions. The exclusion applies specifically to income from premiums received for real property insurance, less any deductions allocable to those premiums.
Potential Benefits
- Increased availability of property insurance in disaster-prone areas.
- Potentially lower insurance premiums for homeowners in affected regions due to increased competition among insurers.
- Financial relief for insurance companies operating in disaster areas, encouraging continued service.
- Economic stability in disaster-stricken communities by facilitating quicker recovery through insurance coverage.
- Reduced burden on federal disaster relief programs as more losses are covered by private insurance.
Potential Disadvantages
- Potential for increased risk-taking by insurance companies knowing their income is tax-advantaged in disaster areas.
- Complexity added to the tax code, potentially creating loopholes or requiring further regulatory clarification.
- Possible shift of the tax burden to other sectors or taxpayers to compensate for the revenue loss from the insurance income exclusion.
- Difficulty in accurately allocating deductions to premiums, potentially leading to disputes or litigation.
- Limited benefit to areas not declared as federal disaster areas, creating geographic disparities.
Constitutional Alignment
The bill aligns with the general welfare clause of the Constitution (Preamble) by aiming to promote recovery and stability in disaster-affected areas. Congress has the power to lay and collect taxes (Article I, Section 8), and by extension, the power to create exemptions and exclusions within the tax code. The bill does not appear to infringe upon any specific constitutional rights or limitations.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).