Study: Margin Tax Hits Consumers With $60 Million in Higher Insurance Rates
By: The Nevada Insurance Council, March 2014
A study by Applied Analysis, a Las Vegas based economic research firm, shows that if the proposed margin tax ballot measure is passed this November, Nevada consumers could face $60 million each year in higher insurance costs for their automobiles, homes, life and health.
“We are very concerned about the impact of this tax on Nevada insurance consumers,” said Michael Geeser, president of the Nevada Insurance Council. “Nevada insurance companies and consumers already pay the highest state premium taxes in the nation,” Geeser continued, noting that the annual $240 million in premium taxes account for the third largest source of general fund revenue for the state. ”This study shows that insurers would also be hit with a 631% business tax increase. That is a cost that ultimately will be paid by Nevada consumers.”
Commissioned by the Nevada Insurance Council (NIC), the study was presented by Applied Analysis Principal Analyst Jeremy Aguero to members of the NIC in February. Industry tax experts have since reviewed the findings and expressed no disagreement with Aguero’s conclusions.
In Texas, the only state in the nation that currently assesses a margin tax, insurance companies and their consumers are specifically excluded from paying the tax.
Aguero noted that the margin tax would generate between $650 million and $750 million each year. “While some businesses would be forced to absorb the additional tax, there are certainly cases where the additional tax would be passed along to consumers in the form of price increases. Examples of where a significant share of the increase in costs would be borne by consumers include insurance and utility cost increases,” Aguero said. Nearly 10% of margin tax revenues would come from insurance companies and their customers.
The study may be found here:
