Bernie Sanders: Top 10 Corporate Tax Cheats

At conferences of the offshore insurance industry, next to the booth for Bermuda, can often be found one promoting Vermont.

While that may seem strange for a chilly, landlocked state, Vermont is an offshore haven in one very real sense: It offers American companies lucrative tax breaks through unusual insurance arrangements.

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More than 560 United States companies, including Wal-Mart Stores, Starbucks and McGraw-Hill, have set up Vermont-based entities to insure their biggest risks and liabilities, giving them a tax benefit in the process. Vermont now rivals the Cayman Islands and Bermuda as the insurance destination of choice for American companies.

The most recent arrival is Wells Fargo, which was granted a waiver by the federal Labor Department in February to provide life insurance and long-term disability insurance to its 153,000 employees through its own private unrated insurance company in Vermont.

With its wholly owned insurer, known as a captive, Wells Fargo will benefit from improved cash flow, new investment income and tax breaks totaling at least hundreds of millions of dollars over the next 30 to 40 years,

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But Vermont’s success in attracting insurance captives also highlights the many ways that American corporations are allowed to minimize their tax bills by moving their profits, intellectual property or liabilities to places that provide substantial tax advantages, whether it is a Caribbean island, Ireland or Singapore. And while many states in the United States provide tax breaks and subsidies to companies that move or expand operations in state, the benefits offered by Vermont are much larger.

http://www.nytimes.com/2007/04/04/business/04vermont.html?n=Top%2FReference%2FTimes%20Topics%2FSubjects%2FT%2FTaxes