Five firms answer call of islands - See offshore reincorporation as way to boost profits

Houston Chronicle ^ | April 20, 2002, 1:55AM | Nelson Antosh

[Action-America]

It's starting!

The media is finally beginning to take notice of the IRS induced native capital flight that has been on the rise for years.

This was one of the headline articles on the Front Page of the Houston Chronicle today (Saturday).  How long will it take before the rest of the media jumps on this big time?  When that happens, you can expect to see IRS induced capital flight by wealthy individuals and corporations really take off.

Sen. Charles Grassley (R-Iowa) calls these moves immoral.  But, what is immoral about a company doing everything it legally can to provide their stockholders the greatest return on their investment?  In fact, doing anything less, in our litigious society, would be grounds for removal of the board.  Similarly, what is immoral about an individual doing everything that he legally can to protect his hard earned wealth from confiscation by an increasingly aggressive IRS?

Rather than attacking those who pay the majority of the bills (top 1% pays more than 1/3 of taxes) with laws that discourage them from staying, they should be passing laws that encourage them to stay (or even to return), by insuring them protection from confiscation.  When wealthy corporations and individuals leave, as demonstrated in this article, it disproportionately reduces the tax base, forcing those poorer people who remain to pay higher taxes, just for the government to stay even.

Notice also, that even the passage of new laws designed to punish companies and individuals that leave, is not slowing down this capital flight.  In fact, as this article shows, increasingly, companies are willing to risk these reprisals by the US government, to get out now, before it gets even worse.

This article is only about Houston companies and only companies in one market.  How many other companies are taking similar steps all across the United States.  Count on it - the number is not small.  Otherwise, you would not see both Republicans and Democrats supporting disgraceful legislation like the Reversing the Expatriation of Profits Offshore Act.  But this isn't even new.  The 1996 Health Insurance Portability and Accountability Act claims the right of the US government to tax the income of individuals that have renounced their citizenship for 10 years after they have renounced US citizenship and taken foreign citizenship.

These and other such oppressive laws show that our lawmakers are seriously worried about losing the power that they have over these wealthy corporations and individuals.  The wealthy are leaving.  The problem is, that our legislators are attempting to discourage the wealthy from leaving instead of encouraging them to stay and that tactic is actually making matters worse.

Action America has been writing about this IRS induced phenomena and the threat it represents since 1994.  See the "Tax and Economy" section of Action America for more info on IRS induced capital flight.

 

[Action-America]

TaxReform Bump!

[neutrino]

Do you recall the Campbell's Soup heir that repatriated to Ireland to avoid the death tax? This has been going on for some time now...and, I suspect it will accelerate.

But wouldn't it be great if the tax code were reformed?

[sinkspur]

It's not "IRS induced." It's "Congress-induced." Congress makes the laws; the IRS executes the ridiculous tax policies handed to it.

And, contrary to what Grassley says, there's nothing "immoral" about maximizing profits by avoiding taxes.

[Lessismore]

An income tax on corporate earnings is bad economic policy because it penalizes successful companies and rewards unsuccessful companies. It would make better sense to tax unsuccessful companies on their losses, so they would go out of business sooner. Companies that turn a profit should get a tax credit to encourage further success.

[Darlin']

Senator Grassley is chastising the wrong group. These corporations aren't unpatriotic or immoral they're just over taxed. Unlike Congress, they're merely looking after the best interest of their constituancy, i.e. their stockholders.

[Mind-numbed Robot]

The tax collector has brought down many a kingdom. Does the Boston Tea Party ring a bell? Instead of reevaluating these onerous taxes that have been tolerated for far too long, the "Kings" in Washington and the state houses are now attempting to build a Berlin Wall to keep the peasants in. They even deem it immoral to oppose their high handed and exhorbitant taxes. Rather than learn a lesson from the past they vow to repeat it.

[LarryLied]

The biggest donor to the Democratic Party in American history, Bernard Schwartz, bases his corporation, Loral Aerospace^*,in Bermuda.

*Loral Aerospace: We don't make Communist Chinese Intercontinental Ballistic Missiles, we make Communist Chinese Intercontinental Ballistic Missiles better!

[supercat]

Instead of reevaluating these onerous taxes that have been tolerated for far too long, the "Kings" in Washington and the state houses are now attempting to build a Berlin Wall to keep the peasants in.

Excellent analogy. Wonder how to open people's eyes?

[Betty Jo]

Bin Laden uses the islands like a whole lot of people do!

The tracking of the medical matrix of Bin Laden gets pretty murky in the offshores!

If anyone comes up with nfo on "NICRIS", "INNERCITY HOLDINGS","WELLCARE", please ping me!

The Milan tower crasher Luigi Fasulo supposedly has a company in Panama called "Eurotex"

Ruppert Murdoch, the owner of FOX Cable News has saved millions and millions of $$$$$$$ by doing the island thing!

[Southack]

The funny part about this entire issue is that what the Houston companies are doing isn't even necessary.

Ever since the income tax was introduced, companies have been paying "consulting fees" to foreign parent firms. Those fees can reduce profits to zero. No profits, no taxes.

Of course, the same people may own those foreign firms, so they get to reap all of the profit and pay no taxes at all.

This is called "upstreaming," and the U.S. Supreme Court has already ruled that it is legal.

[PGalt]

Thanks for the post and the link.

[B4Ranch]

Wonder how to open people's eyes?

The companies will start screaming soon enough. Look for the words "anti facism" in the news reports.

[Alas]

This is called "upstreaming," and the U.S. Supreme Court has already ruled that it is legal.

So, you incorporate in a forign tax freindly country, then do business here in the good ole USA, pat yourself all of the profits as a overseas consultant and reduce your tax liability here in the good ole USA to zip?

Now, let me ask you a question, which tax haven is the friendliest for a company making say 250 K a year in profits?

Mark

[jadimov]

...An income tax on corporate earnings is bad economic policy because it penalizes successful companies and rewards unsuccessful companies. It would make better sense to tax unsuccessful companies on their losses, so they would go out of business sooner. Companies that turn a profit should get a tax credit to encourage further success...

It would make even more sense for the federal government to stop using the income tax for social engineering. The whole system is crazy. A tax on profits is equivalent to a fine on profits. Ergo, they are making profits disappear. Each time Congress and the IRS play with the tax code, they distort the economy by making a businessman do something he normally wouldn't do. They should sit back and let the market sort itself out.

We need to stop taxing "profits" or "income". What we need is a simple tax on sales; then it doesn't matter where things are made, where you do business, or where you incorporate. It's a lot simpler and everyone can understand all the rules. You buy it, you pay the tax.

[dcwusmc]

Hey, sink, something we can finally all-out agree on! A most pleasant surprise!

[Action-America]

"The funny part about this entire issue is that what the Houston companies are doing isn't even necessary."

No.  It isn't necessary today.  What they are doing is actually preemptive.

They are getting out while they still can.

They can read the writing on the walls and can infer what is likely coming down the line.  Nobody knows when the US government will actually attempt to shut down all non-approved international monetary transactions.  It may not happen.  But, the direction of wealth punitive legislation of recent years suggests otherwise.  Certainly, large companies and wealthy individuals don't want to take a chance on being here, should it happen.  That's why they're getting out while they still can.

I have been reporting on IRS induced capital flight since 1994 and I can assure you that what you are seeing here has been going on for over 10 years.  Every time one more of these wealth punitive laws is passed, another large group of wealthy taxpayers leaves.  The only difference is that now the major media is beginning to take notice, which means that it may be getting worse much faster.

That's why these companies are leaving now.

 

[Action-America]

"Now, let me ask you a question, which tax haven is the friendliest for a company making say 250 K a year in profits?"

Check out Escape Artist at http://www.escapeartist.com/

They have country profiles on all of the favored tax haven countries.  Each company and each individual has different priorities, so there is no one easy answer.  You might want to talk to a good offshore attorney, after you narrow down the possibilities.  They will be aware of the latest changes in the laws.

Another good site is Sovereign Society at http://www.sovereignsociety.com/

They have a great free newsletter to help keep you up to date.  They also have a very extensive list of links having to do with expatriation, second passports, offshore finance and offshore living in general.  To get to the links, go to http://www.sovereignsociety.com/vmembers.php?sec=osres.

Good Luck!

 

[dirtydanusa]

And with a company like Stanley who moved all its manufacturing to China at the beginning of the year, the tape measure or the hammer made in China still costs $30 to you and me even though it is cheaper to make. Now who is really getting screwed, we lost our jobs, we lost a major corporation and we still buy this crap. Leave the imported stuff on the shelf and maybe if the bean counters have a few less beans to play with they'll think twice. Who really got screwed? Look in the mirror.

[dirtydanusa]

From Another Post: The meeting came at the end of Alcoa's annual meeting and followed a street demonstration held outside the Westin Convention Center, Downtown, by Mexican workers and their supporters, including the United Steelworkers union.
"They're upset. I'm upset," he said. "They're good workers."
The Mexican workers complained that wages averaging about $10 a day were too low to meet their expenses and that living conditions in communities surrounding the plants were poor. Belda said Alcoa pays the highest wages in the region. "It is low, yes," he said. "But that's what it is. That's the market. If they weren't working for us, they would be working for someone else for less without the same benefits, values and services."

Wow, I wonder if the Chinese know the Mexicans are making $10 a day. How can Alcoa afford to pay such wages. Look out Bermuda, Alcoa is next