Posted on 05/13/2002 1:24:20 PM PDT by SBeck
The Bermuda Tax Triangle
[S] tanley Works ought to change its name to Stanley Flees. The maker of distinctive black-and-yellow tools that for 159 years has made its home in New Britain, Conn., is planning to reincorporate in Bermuda in order to stiff Uncle Sam. Stanley is only the latest in an alarming exodus of greedy companies, but the prospect of the venerable firm taking off for a tax haven caused one local congressman to note that Benedict Arnold, too, left Connecticut and sailed off to Bermuda.
Though perfectly legal, Stanley's move would be an accounting gimmick, aimed solely at cutting its tax bill. A mail drop is about all a company needs to claim residence in Bermuda, which has no corporate income tax. After Stanley announced that it had obtained shareholder approval last week, its move was delayed because of alleged irregularities in the balloting process. It now says it will hold another vote. At issue was whether employees were misled into believing that unvoted shares held in retirement accounts would be counted against the Bermuda plan. If Stanley does go forward with the move, under Bermuda law its management will be less accountable to pesky shareholders.
Like a number of insurance firms and other industrial companies that have gone before it, Stanley says its move would be a way to remain competitive in a global economy. The United States, unlike many countries, taxes its companies' overseas profits. By setting itself up as an offshore entity, Stanley would shield from the Internal Revenue Service its profits made elsewhere, for an estimated annual savings of $30 million. Whether the tax code's treatment of overseas earnings should be revised to level the playing field between American companies and foreign competitors is worth debating. But in our democracy, fleeing to Bermuda is not a constructive way of participating in the national dialogue.
More insidiously, Stanley would also be in a position to avoid paying taxes on profits made within the United States. This becomes possible under a popular tax-avoidance scheme being peddled by major accounting and law firms that involves, in addition to reincorporating in Bermuda, establishing corporate residence in a second sunny offshore jurisdiction, Barbados. Under the terms of a favorable tax treaty, corporate profits earned in the United States can be shipped there and essentially laundered into deductible expenses.
Congress must look at ways of closing these loopholes. Even in the best of times, it is outrageous for companies to engage in offshore shenanigans to avoid paying their fair share of taxes. Doing so after the Enron scandal, in dire fiscal times and when the nation is at war is unconscionable. What was John Trani, Stanley's chief executive, thinking?
Senators Max Baucus and Charles Grassley, the top Democrat and Republican on the Finance Committee, have proposed a bill to stop recognizing tax-driven moves so that if a company seeks to move its domicile offshore for tax purposes, the I.R.S. would still tax it as American-based. Congress should hasten to pass this legislation.
In recounting its history, Stanley's Web site recounts how as a young man in 1843 Frederick T. Stanley founded the company, with a vision to create a "hardware company with unsurpassed customer service, product innovation and integrity." The vision probably never included a flight to an offshore tax haven.
"Congress must look at ways of closing these loopholes."
NT Times, has to get their little dig in. If we weren't taxed to death, companies wouldn't have to resort to trying to keep some of their hard earned dollars. Congress must look at ways to reduce the burden of taxes it places on corporations and individuals. This trend will only continue until people are allowed to keep their money.
And if were a Stanley Works shareholder, I should vote my shares in a way that I, through Stanley Works, end up paying more in taxes? Why? Why isn't my share of every penny of Stanley's profit my property? Why should I let the government have more of that than I need to let it have?
Liberals hate free markets don't they ?
CT is certainly shooting itself in the foot here. Not only is it the highest tax state in the nation, our Attorney General plans on filing law suits against this major employer for its actions in trying to lower its federal income tax. I will bet that CT will certainly be able to attract major business by having an Atty General who loves to sue its resident companies.
Deducting is one thing, hiding revenue and taxable profits are another. The unholy scandal in all of this is that individual taxes will increase as corporations fail to pony up their share. ("Read my lips, no new taxes.")
Let's see. Any company moving off-shore gets relief from taxes, so the bill should nail right around 100% of them.
Heck, why not just let the I.R.S. tax all Bermudan companies. That way they wouldn't have to go through the charade of determining why the company moved.
There ain't no such thing as a "fair" share in taxes.
Who do you think pays the corporate tax ? Your fairy God mother ?
Nailed it one. Talk to the UN about it.
However, we aren't talking about state taxes which is another issue. The taxes that corporations are seeking to evade are the burdensome federal taxes. Somewhere that revenue has to made up and the most likely candidate is your and my wallet. As an individual, I can make the decision to not buy Stanley Works products, as a country, the U.S. can tell corporations (that use this tactic) to go pound sand if they start looking for protection (financial or otherwise).
When I read this statement of yours, I nearly fell off my chair laughing.
The Republocrats and the Demopublicans will ALWAYS try to increase "individual taxes". Thusly:
"Individual taxes will increase as an asteroid moves past Mars."
"Individual taxes will increase as millions of butterflies are frozen in Mexico."
"Individual taxes will increase as an iceberg is calved in the Ross Sea."
Etc. ;-)
All taxation on business entities should be abolished. Then it would be abundantly clear just how much the government costs each individual taxpayer.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.