Table: Wish You Weren't There
Washington rarely cracks down on corporate tax avoidance. But one scheme--companies' ability to cut taxes by moving headquarters to havens like Bermuda--is generating bipartisan criticism. Why? Because tax avoidance was a key element in scandals at companies such as Enron and Tyco, and a wave of companies such as Stanley Works and Ingersoll-Rand have made moves to relocate. Pro-business House Republicans are resisting the curbs, but on June 18, the Senate Finance Committee agreed to back them. Chances are that by fall Congress will limit such deals, at least temporarily. The alternatives:
BAN ALL MOVES
House Democrats, led by Representative Richard E. Neal (D-Mass.), favor this approach.
CURB TAX BENEFITS
President Bush wants to limit tax benefits for foreign parents of U.S. companies. Key senators would slow, but not block, the deals.
CHANGE OFFSHORE TAX LAWS
House Republicans, led by Ways & Means Committee Chairman Bill Thomas (R-Calif.), prefer to enact broad changes in international tax law--though that would be years away.
ENACT A FREEZE
Many lawmakers believe a temporary ban on tax benefits for Bermuda-based companies would be a good compromise.