Businesses Tell the IRS They Are Not American but Executives Stay in USA

Posted on June 4, 2008  Comments (3)

I have previously written about the ethically challenged companies that claim they are not American to avoid paying the taxes that they owe. For some reason the executives, often seem to stay in the USA though? It is sad that such behavior is tolerated.

10 Big Businesses That Have Moved Their Headquarters Abroad to Pay Less U.S. Taxes

Halliburton: Houston-based Halliburton, which offers a broad array of oil-field technologies and services to upstream oil and gas customers worldwide, announced the opening of a corporate headquarters in the United Arab Emirates city of Dubai on March 12, 2007. The company, which was once led by U.S. Vice President Dick Cheney, said that its relocation was part of a strategy that it announced in mid-2006 to concentrate its efforts in the Middle East in order to attract business.

Yes the same company taking billions in Pentagon no-bid contracts (Company Official Defends No-Bid Army ContractHalliburton Contract Critic Loses Her JobHalliburton’s Fleecing Ends — Or Does It?).

And that isn’t all – read this on how they don’t pay social security or unemployment… taxes since they are not an American company when they hire American’s to work for the US government in Iraq. Top Iraq contractor skirts US taxes offshore – “Kellogg Brown & Root, the nation’s top Iraq war contractor and until last year a subsidiary of Halliburton Corp., has avoided paying hundreds of millions of dollars in federal Medicare and Social Security taxes by hiring workers through shell companies based in this tropical tax haven.”

2 Accenture:Consulting company Accenture is the Bermuda-based arm of the former Big Five accounting firm Arthur Andersen LLP, which is known for its involvement in the Enron Corp. scandal. Accenture has done pretty well for itself, garnering $662 million in contracts between Oct. 1, 2001 and Sept. 30, 2002. The company has argued that its operations should not be called corporate inversion because while Arthur Andersen was based in the U.S., Accenture never was.
3 Foster Wheeler Ltd…
4 Ingersoll-Rand Co. Ltd.This New Jersey-based company, which manufactures Thermo King refrigerated trucks, also moved to Bermuda in 2001. In 2007, the company faced an IRS (Internal Revenue Service) audit over the way it classified some debt in its reincorporation in Bermuda in 2002.

The others that decided they were not American: Tyco International Ltd., Cooper Industries Inc., Global Crossing, Seagate Technology LLC, Nabors Industries Ltd..

Related: Purpose of an OrganizationTilting at Ludicrous CEO PaySamuel Adams Acts Like a Good Neighbor

3 Responses to “Businesses Tell the IRS They Are Not American but Executives Stay in USA”

  1. Kevin
    June 6th, 2008 @ 10:03 pm

    I don’t dispute that several companies move simply to avoid taxes, and that it is an ethical issue. However at the same time I wonder if we should look deeper and address the root cause of why they desire to move. Perhaps it is an uncompetitive tax burden, perhaps it is non-value-added regulation, perhaps it is something even deeper. But if it isn’t addressed the “solution” will just be band-aids on band-aids as more and more companies are forced into doing the same thing to remain competitive… and that’s how regulations and tax code get overly complex in the first place.

  2. John Hunter
    June 8th, 2008 @ 5:56 pm

    You are right that the most important issue is to look at the system and improve it. Part of that requires seeing what these companies are rejecting. In general, they are not rejecting America, just paying taxes.

    If they actually withdrew from the USA then they wouldn’t owe taxes and it would be an indication they felt other countries were better. However, they don’t do that, in general. They just hire lawyers to try and steal from the rest of the country by not paying what they owe. For some reason, while the jails in the USA hold more people than ever it still seems stealing millions is less likely to get you in jail than stealing hundreds. There is a systemic failure to fix (probably two – the inequity and the huge waste of human capital locked up in jails). The tax laws are incredible clear that an action that is not taken for a legitimate business reason, but is solely an attempt to evade taxes by exploiting loopholes in the code is illegal. There is no question about this.

    The USA needs to improve various things (the broken, expensive, health care system and huge federal debt come to mind quickly). While regulation in the USA certainly needs to improve, when you compare it to other countries, it seems to regulation and less corruption in enforcement of regulations is a competitive advantage for the USA. Europe sure did a much better job of preparing for energy price increase, for example… but still the USA does well comparatively. regulation of the food system might be an exception: where the USA is worse than average. While failures in regulation related to drugs and medicine get lots of press (at times anyway) I still think the USA is probably doing relatively well (though others are improving much more rapidly the last few decades).

    Another area the USA continues to harm itself with is the increasingly broken copyright policy in the USA increasingly harms the public in favor of gains for private entities in direct opposition to the understanding Jefferson and others had [which is right by the way] on this topic. And the USA is expending huge amounts of political capital attempting to force these bad policies on other countries.

    It is hard for me to judge whether the failure to address infrastructure issues is going to be a big problem – but it could be. That was one more area the USA has enjoyed as a competitive advantage, for at least half a century, but is in danger of losing. I would include the fact that we have much worse internet access then pretty much all of Europe and much of Asia – which is pretty incredible really (and worse cell phone service also).

    There certainly is plenty the USA needs to improve. One area that certainly is not government’s job, but is ours (as stockholders), is getting much better senior leadership (and boards) in companies than the current crop that really don’t understand that they are meant to serve the stakeholders – not tax them for their private benefit. The continued abysmal practices lead one to believe that they don’t even understand robber barron behavior was deemed unacceptable a century ago or understand that morality is part of business (not some exempt area as the robber barron’s believed).

    Dr. Deming’s 7 deadly diseases of management (include several that are really failures of the economy – like the broken health care system and excessive legal damage awards). I would add 2 more diseases: excessive CEO pay (management failure) and broken intellectual property system (economy).

    Still I don’t think the companies were reacting to any of these areas in need of improvement. They just want to take advantage of doing business (and truly being located) in the USA while not paying what they owe.

  3. Easiest Countries for Doing Business 2008 at CuriousCat Investing Blog
    November 11th, 2008 @ 11:02 am

    Employing Workers (Singapore and the USA 1st, Germany 142, Korea 152), enforcing contracts (Singapore 1, Hong Kong 2, USA 6, China 18), paying taxes (Maldives 1, Hong Kong 3, USA 46, Japan 112, China 132)…

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