You are here:HomeNews CenterInsurance News2012Insurance Premium Tax Payments to States Rise

Insurance Premium Tax Payments to States Rise

Increased revenue from premium taxes paid by insurance companies helped boost overall state government tax collections in fiscal 2011
April 24, 2012

Increased revenue from premium taxes paid by insurance companies helped boost overall state government tax collections in fiscal 2011. The U.S. Census Bureau reported an overall increase of $55.7 billion, to $757.2 billion, in fiscal year ending June 30, 2011.

Revenue on taxes imposed distinctively on insurance companies and measured by gross or adjusted gross premiums (insurance premium sales tax) increased $593.8 million, a 3.8 percent increase. For fiscal 2010, insurance premium sales taxes rose 5.3 percent, the Census Bureau said.

The largest increases in insurance premium sales tax revenue were seen in the Northeast and South, according to the 2011 Annual Survey of State Government Tax Collections, which contains annual statistics on the fiscal year tax collections of all 50 state governments, including receipts from licenses and compulsory fees. Corporate net income tax revenue hit $40.2 billion, a 9.4 percent increase, while tax revenue on individual income was at $259.1 billion, a 9.8 percent increase.

Insurance premium taxes were three times as much as general sales tax revenue of $234.5 billion, an increase of 5.4 percent. Corporate net income tax revenue, individual income tax revenue and general sales tax revenue comprised 70.5 percent of all state government tax collections nationally.

What It Means to Agents: A couple of observations. First, this indicates that the insurance business is continuing to recover from the big economic downturn of the last few years. Second, this illustrates part of the motivation behind efforts to bring about federal insurance regulation. Currently, state insurance premium taxes account for three times as much as general sales tax revenue received by the states. That is a very big and tempting target for the federal government. Something to keep in mind when the Treasury Department starts saying how “efficient” federal regulation of insurance would be. Efficient for them, if they manage to get their hands on all or part of this very large pot of money. Devastating for the states, who would lose big-time. Most disputes about public policy are about money – especially when those going after money say, “It’s not about the money.” Guess what? It is about the money.

Filed under: