New Threat To US Companies As Another Patriot Tax Bill Introduced

by Mike Godfrey, Tax-News.com, Washington

23 May 2002

It emerged earlier this week that following the failure of an amendment seeking to remove the tax benefits of offshore reincorporation for US companies, another bill imitating the 'Patriot Tax' legislation has been introduced in Congress.

Republican Representative, Nancy Johnson last week put forward a proposal calling for a two year moratorium on the tax benefits of offshore relocation for companies which reincorporated in Bermuda or other low tax jurisdictions post-September 11. The representative for New Britain, former home of the Stanley Works manufacturing company, described the proposal as a 'stopgap' measure in the event that progress on the Patriot Tax bill proper is slowed by lengthy debate.

According to a report in the Bermuda Royal Gazette this week, Ms Johnson's moratorium proposals have embroiled her in a minor mud-slinging contest with her political opponent in New Britain, and the co-sponsor of the Patriot Tax legislation, James Maloney. The newspaper reports that Mr Maloney has slammed the bill as an 'imitation' of the legislation introduced earlier this year by himself and Democrat representative Richard Neal.

Ms Johnson reportedly responded in more conciliatory tones, explaining that: 'I am a co-sponsor of the Patriot Act. I absolutely support it. But mine is more simple. It's harder to get a permanent change in the tax code.'

She added that: Looking at the reality, we need to have this moratorium capability because there may be a lot of members who have a lot of questions (on the Patriot Act),' presumably referring to the opposition the proposals have received from some Republicans.

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