For Dean, 'captive' insurance a Vt. boon

[curse10]

http://www.boston.com/news/politics/president/dean/articles/2003/12/12/for_dean_captive_insurance_a_vt_boon/

Howard Dean is fond of criticizing politicians who provide tax breaks to "large corporate interests," and one of his favorite campaign lines is a blast at the Bush administration for doling out tax cuts to top executives of Enron Corp.

But during Dean's 11 years as Vermont governor, he enacted tax breaks that attracted to the state a "Who's Who" of corporate America -- including Enron -- to set up insurance businesses. Indeed, Dean said in 2001 that he wanted Vermont to "overtake Bermuda" as the "world's largest" haven for a segment of the insurance industry known as "captives," which refers to firms that help insure their parent companies.

With little notice then -- and barely any mention now in the Democratic presidential campaign -- Dean succeeded in turning Vermont into the kingdom of captives. Vermont has more of these companies than the other 49 states combined. As part of the enticement, Dean led efforts to cut state taxes of such companies, and he helped defeat a Clinton administration effort that would have eliminated $100 million worth of federal tax deductions given to the industry.

<snip>

http://www.boston.com/news/politics/president/dean/articles/2003/12/12/for_dean_captive_insurance_a_vt_boon/

sorry if a dupe, but I didn't find it in a search :-)

[Racenut20]

1. Hmmm, haven't seen this in any of the Governor's speeches yet

[rogerashton]

2. Sounds like Dean is resourceful and successful to me.

This kind of "economic development" strategizing is a fact of life for state and local government here, and for provincial and local authorities in other countries. From what you write, I gather that Dean found a "market niche" for the state and made it work, and the chances are that the state as a whole benefited modestly from his success.

Of course, it is not "liberal," but who said Dean is a "liberal?"

[ithacan]

3. this is good

we need more stories out there so that the corporations don't decide to go with Bush. If they think they've got a friendly ear in the WH, they may just turn on Bush during the campaign.

[patricia92243]

5. sounds good to me

to bring business to his state rather than let them go out of the usa sounds like good business sense to me.

[papau]

4. Captive's as in Insurance Subsidiaries are not evil

This is part of my world. The Vt ins dept follows every rule in the book and does a good job. Getting a few dollars into Vermont (2% of the budget via the corporate premium tax that is used without an additional income tax - which is the Hong Kong method of taxing ins co as well as many states in the US)giving fast effective handling of incorporation requests, and then doing the standard NAIC financial and operational reviews - with other States participation - is a good thing.

Granted that Vt gets few dollars or jobs (20 directly in the Dept of Ins) from this - but it is better than no jobs and dollars.

Capitalization requirements are the main reason for the Vt success - (along with state tax breaks) -most states refuse to treat captives differently from the way they use to protect the general public with insurance companies that deal with the general public.

Tax havens status coming from captive status has nothing to do with Vt. - The Globe should check with Bush on the benefits of having the GOP in power if you are a corporation.

[Romberry]

9. Thank you!

Great post. Some people seem to forget that America is still a capitalist society and states like Vermont still have to play.

[JM]

6. Good for Dean...

...Any Governor that has foresight to find a niche market for jobs and businesses in their state is a good thing.

At least he is intereted in keeping the damn jobs in the continental U.S.

Seems like it was a win for the residents of Vermont, unless I am missing something.

Trying to compare Dean's use of captives to Bush, however, is insane. I don't see where those companies having captives in Vermont related to his campaign funding, where any of those companies were on Dean's advisory boards, or where Dean allowed any of those companies to specifically bankrupt another state using illegal means.

Find proof of any of those actions and we'll talk.

JM

[liberalmuse]

7. Every governor has to do this...

in order to be able to fund their policies. I look at what Gov. Dean did in Vermont, and then I look at what Gov. Bush did in Texas, and the way these men used corporations (or vice-versa in Bush's case) was very different. There is a huge difference between corporate cronyism--allowing corporations to run amok with no liability, and using corporations to help provide services to the people, rewarding them with tax breaks in return as an incentive. I suppose there are more 'captives' in Vermont because more citizens are insured in that state than in the average state.

[Justice]

8. Dean Just Like Clark

From the article --

"Leonard Crouse, Vermont's deputy commissioner of captive insurance, agreed there may be cases in which the parent company pays less taxes in its home state because the captive operation in Vermont reduces taxable income."

As Governor, Dean took positions that were good for Vermont - which was appropriate. Like his support of NAFTA - which was good for VT - Dean supported captives. Now that he is looking at the entire country, his positions may change, as they have on NAFTA.

People criticize Clark for voting for Reagan. Clark says he voted for Reagan because Reagan was good for the military. This is just like Dean, who supported policies that were good for his constituents but perhaps not good for other constituents. When Clark and Dean looked at the entire country, their positions changed because they had a different constituentcy.