A Sign of Progress

June 30th, 2009

When efforts are undertaken to change the state of play in a society, be it for voting rights, civil rights, banning landmines etc., at first blush the task looks daunting.  The powers-that-be look too strong, too wealthy, too well-organized.  Conventional “wisdom” can often be against the change makers.  The effort, to be sure, is an uphill battle.

But along the way there are indications that the message is being heard, that changes are taking place.

Such was the case on Sunday when Business Week reported that “U.S. Companies Seek New Tax Havens”.  The story noted that “Since October at least a half-dozen major corporations, including Tyco International (TYC), Noble (NE), and Ingersoll-Rand (IR), have proposed reincorporating in Ireland or Switzerland.”

The reason for the proposed moves is that legislation in Congress and the policies of the Obama administration have made the company’s stay in the Cayman Islands and other Caribbean locales more difficult.  A switch to Ireland or Switzerland are seen by some firms as not as good an option (as far as corporate tax is concerned) as the Caymans but still better than the US.

Naysayers will claim that the legislation is simply forcing the companies to pay more tax – and not to the US.  But I see it as squeezing the tax havens and secrecy jurisdictions from helping companies and wealthy individuals to hide assets and skirt the laws of their home countries.

The work is far from done.  These are only American companies fleeing a few island tax havens.  But, if  legislation and policies similar to those being discussed in the US are taken up in other parliaments and by other governments (are you listening G20 countries?) after a while there will be no where for companies and rich individuals to game the system.

Written by Tom Cardamone

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