When an American Company Redomiciles to the Cayman Islands, What Lesson Should We Learn?

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From Big Government:

By Dan Mitchell

August 20, 2011

Another American company has decided to expatriate for tax reasons. This process has been going on for decades, with companies giving up their U.S. charters (a form of business citizenship) and redomiciling in low-tax jurisdictions such as Bermuda, Ireland, Switzerland, Panama, Hong Kong, and the Cayman Islands.

The companies that choose to expatriate usually fit a certain profile (this applies to individuals as well). They earn a substantial share of their income in other countries and they are put at a competitive disadvantage because of America’s “worldwide” tax system.

More specifically, worldwide taxation requires firms to not only pay tax to foreign governments on their foreign-source income, but they are also supposed to pay additional tax on this income to the IRS – even though the money was not earned in America and even though their foreign-based competitors rarely are subject to this type of double taxation.

In this most recent example, an energy company with substantial operations in Asia moved its charter to the Cayman Islands, as reported by digitaljournal.com.

Greenfields Petroleum Corporation…, an independent exploration and production company with assets in Azerbaijan, is pleased to announce that the previously announced corporate redomestication…from Delaware to the Cayman Islands has been successfully completed.

Because it is a small firm, the move by GPC probably won’t attract much attention from the politicians. But “corporate expatriation” has generated considerable controversy in recent years when involving big companies such as Ingersoll-Rand, Transocean, and Stanley Works (now Stanley Black & Decker).

Statists argue that it is unpatriotic for companies to redomicile, and they changed the law last decade to make it more difficult for companies to escape the clutches of the IRS. In addition to blaming “Benedict Arnold” corporations, leftists also attack low-tax jurisdictions for “poaching” companies.

Libertarians and conservatives, by contrast, explain that expatriation is the result of an onerous tax system that imposes high tax rates and requires the double taxation of foreign-source income. Expatriation is the only logical approach if companies want a level playing field when competing in global markets.

More here……….

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Besides businesses re-domiciling because of taxation…….

Farmers in the near future may be over-regulated by the EPA and the DOT:

(Unfortunately most US farmers can’t escape)

AGENDA 21 UPDATE: FAMILY FARMS ARE UNDER ATTACK

If family farms shut down due to excessive regulation and large loss of income $$….then what? Will America have to rely on China or other foreign countries for food imports?

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Related link: Read by clicking on blue letters below

President Obama’s Regulatory Dust-Up

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“In this present crisis, government is not the solution to our problem; government is the problem.”

January 20, 1981: From Reagan’s Inaugural Address.

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2 CommentsLeave a comment

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