Posted on 09/11/2002 1:47:31 PM PDT by Risa
California bans tax dodgers Bermuda: a popular location for a PO Box headquarters
California, the most populous and richest state in the US, will no longer do business with or invest in companies that dodge US taxes.
In recent months a flood of firms have moved their official address from America to offshore havens including the Cayman Islands and Bermuda to avoid paying tax at home.
But in most cases the only sign of their new headquarters is a postbox and perhaps a lawyer, while everything else stays exactly where it was in the US.
Now the California state treasurer's office, which controls $45bn in state and local funds, lists 23 such companies which are not acceptable business partners.
It has also called on two massive California public pension funds to pull $750m of investments in them as well.
A SHAM Philip Angelides, the state treasurer, was clear on what the companies had done.
"Corporations hiding behind a mailbox in Bermuda are shirking their duty as Americans, and undermining confidence in the financial system," he told reporters.
"We will use our clout as investors to let companies know we will not tolerate this type of irresponsible conduct."
He compared their behaviour with that of companies such as Enron and WorldCom which have been accused of fiddling their figures to improve their share price.
"These sham transactions, like the accounting of scandals at Enron and WorldCom, are the kinds of deceptive corporate practices that have shaken the financial marketplace and cost families, pensioners and taxpayers billions," he said.
Moving offshore also makes it more difficult for shareholders to keep tabs on the company they own, and more difficult to sue if necessary, he said.
Mr Angelides is on the board of the California Public Employees Retirement System (CalPERS) and the State Teachers' Retirement System (CalSTRS), whose collective financial weight amounts to over $250bn.
CalPERS will discuss the proposal to sell up its holdings in the firms on the list at its next board meeting in August.
DODGING THE TAX BULLET The flight to a phantom existence on islands in the Caribbean or the Gulf of Mexico comes as an increasing number of US companies complain that taxation at home is more onerous than that faced by foreign competitors.
Not necessarily the best defence against tax evasion
In response, big consultancies have advised that they relocate their official headquarters elsewhere.
Among those who have taken advantage are Tyco - whose former chief executive is himself currently under arrest for suspected tax dodging - and Ingersoll-Rand, both companies which are on Mr Angelides' list.
The consultants are taking their own advice too, with Accenture - formerly part of auditors Andersen - and PricewaterhouseCoopers' new spin-off Monday both deciding to head offshore.
CONGRESS FIGHTS BACK Many Republicans are broadly in favour of what they are doing - although in the wake of recent corporate scandals, few - bar a handful of rightwing think tanks, most prominently the Centre for Freedom and Prosperity - are prepared to say so in public.
But others say the move is unpatriotic, and both Democratic and Republican legislators are pushing new laws to prevent the practice.
Jim Maloney, who represents Connecticut in the House of Representatives, believes companies are being unpatriotic.
His line, and that of Senators including Iowa Republican Chuck Grassley, is that because their offices stay put and therefore continue to use US services without paying a penny to support them, they are effectively swindling other taxpayers.
Connecticut's Stanley Works, a century-old manufacturer, was stalled in its attempt to move offshore by a court case which held it had mishandled the shareholder ballot on the decision.
TAKE NOTE But it is California's action - unhampered by lobbyists' millions - that is likely to have more effect on the companies in question.
"California is the 800-pound gorilla of the states, so I don't think anybody can afford to ignore it," said Patrick McGurn, director of corporate programmes at Institutional Shareholder Investors.
"A board that wouldn't take notice of the action probably isn't doing its job."
The full list published by the state treasurer includes: Accenture, APW, Cooper Industries, Everest Re, Foster Wheeler, GlobalSantaFe, Gold Reserve, Helen of Troy, Ingersoll-Rand, LEucadia National Corp, McDermott International, Monday, Nabors Industries, Noble Corp (Drilling), PXRE Corp, Stanley Works, Transocean Offshore, Tyco International, Veritas DGC, Weatherford International, White Mountains Insurance, Xoma Corp.
posted by risa
In fact, the Real Solution is to abolish the corporate income tax!
And while we are at it, replace all federal taxes with a National Retail Sales Tax and abolish the IRS also!
Let's do this once, and do it right!
“I have sworn upon the altar of God eternal hostility against every form of tyranny over the mind of man.” [Thomas Jefferson, letter to Benjamin Rush, 1800.]
Scrap the Code! Scrap the IRS! Abolish the VLWC!
We will never be a truly FRee people so long as we have the income tax and the IRS.
Click here to help us scrap the Code, scrap the IRS and abolish the VLWC!
You can also click here to find out how to help us replace the income tax with a National Retail Sales Tax and abolish the IRS!
We will never be a truly FRee people so long as we have the income tax and the IRS.
Yup. It encourages me to consider leaving the state before they do anything equally as boneheaded.
Far too much of this nation's attention is focused on the current unwieldy tax system. It's costing us much more than what we pay in taxes.
The property of this country is absolutely concentred in a very few hands, having revenues of from half a million of guineas a year downwards. These employ the flower of the country as servants, some of them having as many as 200 domestics, not laboring. They employ also a great number of manufacturers and tradesmen, and lastly the class of laboring husbandmen. But after all there comes the most numerous of all classes, that is, the poor who cannot find work. I asked myself what could be the reason so many should be permitted to beg who are willing to work, in a country where there is a very considerable proportion of uncultivated lands? These lands are undisturbed only for the sake of game. It should seem then that it must be because of the enormous wealth of the proprietors which places them above attention to the increase of their revenues by permitting these lands to be labored. I am conscious that an equal division of property is impracticable, but the consequences of this enormous inequality producing so much misery to the bulk of mankind, legislators cannot invent too many devices for subdividing property, only taking care to let their subdivisions go hand in hand with the natural affections of the human mind. The descent of property of every kind therefore to all the children, or to all the brothers and sisters, or other relations in equal degree, is a politic measure and a practicable one. Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions or property in geometrical progression as they rise. Whenever there are in any country uncultivated lands and unemployed poor, it is clear that the laws of property have been so far extended as to violate natural right. The earth is given as a common stock for man to labor and live on. If for the encouragement of industry we allow it to be appropriated, we must take care that other employment be provided to those excluded from the appropriation. If we do not, the fundamental right to labor the earth returns to the unemployed. It is too soon yet in our country to say that every man who cannot find employment, but who can find uncultivated land, shall be at liberty to cultivate it, paying a moderate rent. But it is not too soon to provide by every possible means that as few as possible shall be without a little portion of land. The small landholders are the most precious part of a state.
-- Thomas Jefferson to James Madison, Oct. 28, 1785 -- PROPERTY AND NATURAL RIGHT
That's one reason why lots of European leftists hated Reagan. The tax rate cuts in the US in the 1980s made investments in the US more appealing than in other parts of the world. This undermined the ability of socialists in Europe to maintain confiscatory tax rates.
Accomplishable with a relatively low 20% revenue tariff placed on ALL imported goods.
Tariffs, because they're easily hidden from the end consumer (read: me and thee), become a tempting means of engaging in social engineering.
I want people to be able to see just how much goobermint costs them on a daily basis, so they can make an intelligent decision on whether they're getting their money's worth.
Excessively burdensome on domestic small business and subject to abuse by the black market. A revenue tariff imposed at the border is more easily enforceable (the mechanism is already in place) and has the advantages of allowing both our citizenry and domestic business to reap the pleasures of our own resources without taxation. It would be nice if the individual income tax could be supplanted by tariffs as well, as was practiced by our Founders. However, Government has become excessively bloated for that solution, a condition that renders current NRST proposals abhorrently tryrannical.
The corporations are doing the right thing in trying to keep more of their money for their shareholders. In the age of dwindling corporate profits and recessionary downsizing, corporations who refuse for "patriotic reasons" to do whatever it takes to minimize their tax burden are committing corporate sucide and putting themselves at a free market disadvantage to overseas firms.
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