Earlier this week the California Insurance Commissioner’s Office issued a press release in which they congratulated Governor Jerry Brown for signing into Law AB 32. This new bill is designed to increase the dollar limit that insurance companies, and other financial institutions can obtain in order to buy tax breaks through the Department of Insurance.
The way the program has been working, is that an insurance company can buy a tax break starting at a $50,000 buy-in price, and receive a 20% tax break based upon that $50,000 total. The tax break purchase money is then funneled into the Community Organized Investment Network (COIN), COIN then distributes the funds to Community Development Financial Institutions for investment in undeserved communities.
The limitation on the dollar amount available each year for the COIN program has been $10 million but now with AB 32 becoming law, the dollar amount will be raised to $50 million per year.
At a time when California is burdened with one of the largest sales tax amounts, one of the largest income tax rates and the largest gas tax percentage in the nation we need every dollar available, and the Department of Insurance in this state should not be creating tax shortages that you and I need to make up out of our wallets.
The mission of the California Department of Insurance is very eloquently stated on their website www.insurance.cal.gov, ”We act to ensure vibrant markets where insurers keep their promises and the health and economic security of individuals, families, and businesses are protected.” The mission statement does not say one word about selling tax breaks to the very companies they are supposed to be protecting us from.