Connecticut To Ban Offshore Firms From State Contracts

by Mike Godfrey, Tax-News.com, Washington

29 May 2003

In the latest attack on 'unpatriotic' US corporations, a bill recently passed in the state of Connecticut's House of Representatives will prohibit state agencies from signing contracts with publicly traded companies who have incorporated offshore.

The bill is largely the consequence of events last year when Stanley Works announced it would reincorporate in Bermuda to save a reported $30 million in taxes. The firm abandoned its plan however amid fierce protests.

The legislation has sparked debate on whether such action by the state is compatible with the constitution, and opponents argue an individual state does not have the right to discriminate against companies on the grounds of place of incorporation.

State lawmakers are drawing up a list of firms barred from taking state contracts, and this is expected to contain 18 names initially. They allege that these firms merely have a PO Box in an offshore location whilst their CEOs continue to work in the United States.

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