Enron Anger Adds Fuel To 'Patriot Tax' Fire

by Mike Godfrey, Tax-News.com, Washington

10 May 2002

A report in the New York Times, now notorious in Bermuda as the organ which sparked - and continues to fuel - the row in the United States over offshore reincorporation has suggested that so-called 'Patriot Tax' legislation designed to remove the tax benefits of offshore incorporation for US companies, is likely to pass into law as a result of public anger over the collapse of Enron.

Although the furore was started by an NY Times article pointing to the 'wave' of US companies choosing to relocate to Bermuda for tax purposes, the newspaper reported earlier this week that revelations concerning the sheer number of offshore subsidiaries held by the former energy trading giant may also add fuel to the primarily Democrat-led campaign.

Responding to the article on Wednesday, the Bermuda Royal Gazette pointed out that the jurisdiction had been home to just eight of the company's 881 offshore subsidiaries.

The New York Times cited the example of Connecticut, home of the Bermuda-bound Stanley Works corporation, as a prime example of political feelings running high on the subject of offshore reincorporation. Due to reapportionment, Democrat Representative Jim Maloney, and Republican Nancy L. Johnson (also a senior member of the Ways and Means Committee) are running against each other for re-election, and the issue has become part of the election campaign.

'She touts her seniority on the Ways and Means Committee and her ability to get things done,' Mr Maloney said of his rival. 'I'll be interested in seeing if she can use her position to advance this bill. If she doesn't, that will indeed be a part of the discussion in the campaign.'

According to the NY Times report, Democrat Representative Richard E. Neal, one of the more vehement supporters of anti-tax haven legislation, also recently observed - somewhat chillingly for newly reincorporated companies - that: 'If we can get this bill on the House floor, I promise you it will get 300 votes.'

The House has just 435 members.

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