New York Times Continues Bermuda Smear Campaign

by Mike Godfrey, Tax-News.com, Washington

17 May 2002

The New York Times continued with its vendetta against the offshore jurisdiction of Bermuda this week, with a scathing article entitled 'The Bermuda Tax Triangle', and another called 'The Great Evasion', both designed to ensure that the political frenzy over the offshore incorporation of US companies doesn't die down anytime soon.

Offshore advocates have argued that the newspaper was irresponsible in its reporting of the news that the shareholders of US manufacturing company, Stanley Works, had voted in favour of relocating the company's headquarters to Bermuda, suggesting as it did that: 'a mail drop is just about all a company needs to claim residence in Bermuda'.

In 'The Bermuda Tax Triangle', it was also, somewhat disingenuously, suggested that the reason that Stanley Works decided to hold another vote was that there was a suggestion that shareholders had been deliberately misled:

'After Stanley announced that it had obtained shareholder approval last week, its move was delayed because of alleged irregularities in the balloting process. It now says it will hold another vote,' the article stated.

In actual fact, Stanley Works announced earlier this week that the second vote is intended to dispel any accusations of 'impropriety' amid concerns that shareholders whose stake in the company falls within their 401k retirement plans may not have fully understood the voting process.

A second article, penned by NY Times Columnist, Paul Krugman criticised the Bush administration for failing to come down heavily on expatriating companies in the name of the stars and stripes:

'What does it say to the nation when companies that are proud to stay American are punished, while companies that are willing to fly a flag of convenience are rewarded?' Mr Krugman asked.

However, if the newspaper's letters page can be considered representative, the American public, at any rate are not all convinced by the argument that reincorporated companies should be punished via 'Patriot Tax' legislation.

Of the sample of responses to the two anti-offshore features published this week, three echoed the sentiments of the New York Times writers, calling for US corporations to stump up their taxes in the name of 'the war effort', whilst two readers criticised the tone of the coverage:

'No one need pay more tax than the law imposes. Moreover, Stanley Works' profits will be taxed at least once, when they are distributed to shareholders,' observed one NY Times reader. 'Rather than fixing the perceived loophole, perhaps it would be wise to take a closer look at the necessity of double taxation of income earned by corporations.'

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