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God
Bless Bermuda
May 11, 2002
By Brian Balta
Ah patriotism. What a wonderful thing it is to be able to
love one's country. Last fall, we saw it everywhere. SUV's
riding along with American flags hanging from their antennas,
people standing up on overpasses waving the American flag,
and God Bless America being sung at sporting events everywhere.
There are a lot of people who really do love this country.
I am one of them. I love being able to sit here on my computer
and type complaints about whatever comes to mind. I love being
able to think freely. I love not having a secret police force
following me around. I love the opportunities this country
has provided me. I love this country. That's why I can never
be a C.E.O.
Today, the Stanley Works Corporation (SWK) announced that
its shareholders have approved a plan to move the company
to Bermuda. The company is one of the leading manufacturing
providers in this country for hardware and tools. The Company
CEO John M. Trani described the move by saying "Our shareowners
have strongly affirmed the benefits of re-incorporation: creating
greater operational flexibility, enabling better management
of international cash flows and helping us deal more effectively
with our complex international tax structure. The global playing
field has been leveled, and our company is now better able
to compete." What a great business move. The company has found
a way to rework its tax structure to be more competitive in
the new global marketplace. Wonderful work guys! I'd never
have thought of that one.
Wait, that seems like a short column. Maybe I should analyze
the move a bit more.
Naturally, the first question I should ask is "what is the
company gaining by moving to Bermuda?" Well, this is where
the issue becomes a bit thornier. The move to Bermuda will
save the company an estimated $30 million a year in tax payments,
as now it won't have to pay U.S. corporate taxes on any of
their overseas sales.
Stanley is not the first company to move to Bermuda. Insurance
companies started leading the exodus to the island a few years
ago. Now the island can proudly claim that it hosts Ingersoll-Rand,
Foster Wheeler, and Cooper Industries, a trio of industrial
companies; Nabors Industries, which is involved with servicing
oil wells; Tyco International, who's stock has lately been
battered due to accounting concerns; Accenture Ltd, the world's
largest accounting company, and our good friends Global Crossing,
Inc, among others.
Ingersoll-Rand has estimated that it will save them $40 million
in tax payments this year. Tyco has estimated that it has
saved over $400 million since it moved. This looks like a
wonderful business decision. Good work guys!
Wait, wait, must stop urge to compliment... must keep
looking...
Let's take a glance at what happens when a company moves
to Bermuda. According to the New York Times, when Ingersoll-Rand
moved to Bermuda, essentially all they had to do was pay $27,000
for a mailing address, and they could register as a Bermuda
company. The company doesn't have to hold meetings there,
nor do they have to own land. In fact, they don't even have
to have a single employee there.
Wait, now this is starting to sound a bit underhanded, so
let me look at it again. Ok, so these companies are declaring
themselves to be Bermuda Companies. For Stanley, they basically
declare that they are a subsidiary of a larger company in
Bermuda and change a few mailing addresses. Then, almost as
if they had waved a magic wand, they're a Bermuda company
instead of an American company.
They keep the same stock symbol, they are still traded on
the NYSE, they still can sell products in America, their offices
still have all the benefits of security provided by the American
law enforcement agencies, the American Court System, and the
U.S. Military. Several of the companies still receive very
lucrative U.S. Government contracts. They can still lobby
congress, they can still do every single thing they could
do before the move, but they just don't have to pay those
oppressive U.S. taxes.
Now let me get this straight. We're fighting a war right
now to protect our very way of life. Our budget is back in
deficit again. The government is on the border of being forced
to default on the national debt. In the midst of all this
turmoil, the patriotic response of these companies is to buy
a mailbox in Bermuda so that they don't have to pay their
portion of these expenses. This is reprehensible. How in the
world can these people live with themselves? Our nation is
in crisis, and it's more important to them to keep profits
high, no matter the means they have to undertake to do so.
I'm done complimenting them now, now I'm more disgusted.
This is why I could never be a CEO I'm too emotional. I would
actually care too much about the fact that I'm screwing over
the country I love to be able to take an underhanded action
like these companies have.
Some might say that it is the fact that U.S. Taxes are so
high that is the reason why we see these companies leaving,
and that these examples should drive the country to lower
taxes even further. I would challenge anyone who thinks that
to think about whether these corporations would be happy if
we had cut back on the U.S. military enough to keep their
taxes low, bringing it to the point where it couldn't respond
in Afghanistan. Or, would the companies rather pass on any
U.S. government contracts that might come their way, just
so that they can argue that their taxes should be lower.
I can't imagine that any of these Bermuda companies would
be willing to give up the things that the U.S. Government
does which work to their benefit. However, through their actions,
they're simply deciding that they don't want to pay for those
benefits. There is a word for taking advantage of services
without paying for them; stealing. Thankfully, there have
been a few legislators who have spoken up on this issue. The
New York Times quoted Representative Charles B. Rangel
of New York, A Democrat on the House Ways and Means Committee,
as saying "Some companies flying the Stars and Stripes renounce
America when it comes to paying their taxes. They choose profits
over patriotism. So far, the Bush Treasury Department has
shown no interest in stopping these corporate moves, or even
drawing attention to them. Supporting America is more than
about waving the flag and saluting - it's about sharing the
sacrifice. That's true of soldiers, citizens, and it should
be true of big companies, too."
Senator Charles E. Grassley of Iowa, a Republican on the
Senate Finance Committee, also chimed in by saying "There
is no business reason for doing this, other than to escape
U.S. taxation. I believe the Finance Committee needs to investigate
this activity." Unfortunately, the voices of these Congressmen
seem to have fallen on the deaf ears of an administration
too pro-business to pay attention to the things businesses
are doing. There are no estimates as to how much money the
creation these Bermuda companies has cost the American government
thus far, and not surprisingly, there is no one in this administration
even doing any research to try to create such an estimate.
It's just another thing that we're letting slide, because
business can do no wrong.
I find it hard to believe two things in this situation: first
that the nation is actually allowing these relocations to
happen, and second, that these people actually have the gall
to run and hide from their country in this manner. Haven't
we all heard from the Bush Administration that we'll need
to make sacrifices to win this war? We'll need to tolerate
a higher national debt, intrusions into our privacy, and constant
threats of another attack. These companies, however, can't
be bothered to worry about petty little things like the future
of democracy. All that matters is profit. If they have to
screw the country out of the money that they owe the nation,
then as far as they're concerned, that's their right, because
their stockholders are more important than the entire country.
To top it all off, the government is allowing it to happen
too.
Sources:
U.S.
Companies File in Bermuda to Slash Tax Bills
The
Stanley Works Shareowners Overwhelmingly Approve Change in
Place of Incorporation to Bermuda
Brian Balta is a student at Indiana University, and is a columnist
at www.hoosierreview.com,
IU's newest news source.
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