At a time when Colorado is in financial crisis due to COVID-19, Colorado lawmakers are putting thousands of Colorado jobs at risk with the introduction of
HB20-1420, a proposal that among other recommended cuts, would repeal Colorado's Regional Home Office Insurance Premium Tax Credit. This bill will have significant consequences to thousands of current and future Colorado jobs, community investments and charitable contributions. Colorado insurance consumers could also pay for it in higher insurance premiums at a time when we can least afford it.
"As our state is trying to find a way to bring business back, this move will have long-term implications in driving business and well-paying jobs out of Colorado to neighboring states-who are competing with Colorado to attract business and workforce opportunities by providing a positive, stable workforce environment and incentives," says Carole Walker, Executive Director of the
Rocky Mountain Insurance Association (RMIA). "This bill demands
one of Colorado's largest employers-the insurance industry, and consumers to shoulder additional taxes at a time when we need to invest in business-not push jobs out of state."
"This is an expensive band-aid to cover an overall budget shortfall with no stakeholder process, deeper financial analysis and consideration of the potential cost to employment and investment in the state provided by the long-standing regional home office insurance tax credit," warned Lyn Elliott, Assistant Vice President, American Property Casualty Insurers Association of America. "Colorado insurance companies already pay nearly $300 million annually in insurance premium taxes-the third largest tax revenue generator behind income and sales tax."
Companies that invest in putting a regional office in Colorado and abide by a very high bar of providing jobs-ranging from executive to staff-level along with other statutory requirements-receive a 1% tax credit on the amount of premium tax paid. Companies that do not qualify pay 2% on premiums collected.
Here's the financial bottom line:
The regional home office tax credit is tied to jobs in Colorado which also leads to greater investment in commercial real estate, residential real estate, and community investments including municipal bonds and charitable giving.
- Nearly 14,000 people are employed by 87 companies in 34 locations that are designated regional home offices. Here is a link to a map of all the regional home offices and the number of employees.
- Insurers apply for this tax credit annually and are subjected a rigorous inspection and audit process. This tax credit is not automatically given to any insurer.
- In order to qualify for this tax credit an insurance company must have a variety of levels of employees (ie executive-level, technical functions, customer service representatives, etc) and provide support for multi-state operations.
- An industry survey showed this tax credit is a "significant factor" for several property and casualty companies that choose to make Colorado a home for their business.
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