Occasionally, I am asked if I think the 831(b) tax election for captive insurance companies will be eliminated. While I don’t have a crystal ball, I really see very little reason for Congress to change the law regarding small insurance companies. And, the recent news flurry surrounding Apple’s tax avoidance strategies caused me to ponder the question a bit this week. After doing so, I think the likelihood of changing the tax code for captive insurance companies is even more remote. The tax revenue (if any) avoided by captive insurance companies is a micro-peanut compared to the taxes avoided by Apple. Furthermore, Apple is just one company. There are many other large corporations that reap large profits and employ similar tax avoidance strategies.
Recent reports about Apple’s incredibly low corporate tax rates suggests that, pound-for-pound, Apple’s lawyers are for more valuable than Apple’s programmers. Continue Reading