Democrats blast high-end life insurance plans as tax dodging schemes for rich

WASHINGTON - Democrats leading the Senate Committee on Finance released a scathing report on Wednesday that criticizes "private placement life insurance" (PPLI) as amounting to major tax breaks for the rich. 

In the report, authored by Chair Ron Wyden (D-Ore.), Democrats argued that these insurance policies exist only to promote "ultra-high net worth clients," and act as a tax break for them in order to avoid paying billions. 

Wyden says the plans act as a tax shelter and says the plans offer $40 billion in policies to only a select amount of wealthy individuals. 

"I’m a strong defender of life insurance as a source of financial security for hardworking American families and retirees, but that’s not what’s going on with these tax-dodging private placement policies that are only available to the ultra-wealthy," Wyden said in a statement.

The report follows an 18-month investigation into PPLI policies. Democrats say they found that because the premiums of these policies require millions of dollars, they are essentially a non-existent option for middle-class Americans. 

According to a report from The Washington Post, there isn't a requirement for anyone to report ownership of PPLI on their tax returns. This reportedly allows individuals to use the plan as a shied for "lucrative investments in alternative assets."

Wyden said he plans to introduce legislation to "crack down on the abuse" of these policies. 

"As is often the case with our tax code and the ultra-wealthy, the scandal here is what’s legal. The companies weren’t even trying to hide the fact that their PPLI policies were tax dodges for the very top — that’s precisely how they were promoted," Wyden’s statement said. "It’s obvious that this is an abuse of the rules that are intended to protect typical American families."

 

 

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