Some people really do think Obama is serious

Posted on

I'm saying I think President Obama will enact the Stop Tax Haven Abuse Act.

I'm not alone. See this from the Wall Street Journal:

Several big U.S. companies are reincorporating from Bermuda to Switzerland, helping them avoid expected legislation aimed at corporations located in tax havens.

Conglomerate Tyco International Ltd. and oil-industry contractors Foster Wheeler Ltd. and Weatherford International Ltd. announced their moves Wednesday. Transocean Inc., a big offshore driller, received shareholder approval Monday for a similar move. The board of Bermuda-based insurer ACE Ltd. earlier this year approved a "redomestication" from the Cayman Islands to Zurich.

The move to Switzerland will help the companies preserve the tax benefits they had in Bermuda and the Cayman Islands, while using Switzerland's tax treaty with the U.S. to shield them from possible adverse legislation from the incoming administration and next Congress. Bermuda imposes no corporate income tax. Switzerland has a corporate income tax, but doesn't levy it on profit earned by subsidiaries overseas.

President-elect Barack Obama when he was in the Senate was one of the lead sponsors of an antitax-haven bill last year that never made it to a vote. A similar measure would likely have a better chance under a more heavily Democratic Congress and supportive president.

"Basically the reason why it's happening now is the concerns that the Obama administration may close some of the loopholes," said Mark Brown, an analyst with Pritchard Capital Partners.

I think we can safely assume it's going to happen.

Just when Boris Johnson (and no doubt George Osborne) are trying to do the exact reverse in the UK.