American companies are incorporating into Bermuda to lower their taxes. Some people suggest that this growing trend is unpatriotic. In reality, these companies are acting in the spirit of America’s original patriots.
The New York Times reported1 that these companies usually keep their main offices in the states and thus retain the security, legal system and courts of the United States government, but their income from outside America becomes exempt from the US tax system.
Companies such as Stanley Works, a Connecticut maker of hammers and wrenches, and Ingersoll-Rand, a New Jersey industrial manufacturer, are moving to Bermuda because its political system is stable, its legal system is similar to that of the US, and it has is no income tax. Stanley Works expects to cut corporate taxes annually from about $110 million to $80 million; Ingersoll-Rand expects to cut from about $155 million to less than $115 million.
In response to these moves, Representative Charles Rangel of New York, the ranking Democrat on the House Ways and Means Committee, said, “Some companies flying the Stars and Stripes renounce America when it comes to paying their taxes. They choose profits over patriotism. So far, the Bush Treasury Department has shown no interest in stopping these corporate moves, or even drawing attention to them. Supporting America is more than about waving the flag and saluting — it’s about sharing the sacrifice.”
Translation: companies seeking a “tax haven” — i.e., economic freedom, in Bermuda to keep and make money, disown their country and thus are unpatriotic; instead government must cease those freedoms and force them to pay their “fair share” of (burdensome) taxes — that is, stop self-interest by enforcing self-sacrifice to the group, America.
But politicians such as Rangel evade the basis of taxation: government’s forced confiscation of money that individuals have earned and have a right to keep. To suggest that Americans who use available freedoms to avoid (not evade) more burdensome taxes aren’t paying their “fair share” of them, amounts to saying they aren’t being fair about letting government stage a stickup for their wallets.
Patriotic politicians don’t demand the injustice that all American must be as “fairly” robbed as the next American. They don’t seek to enact new laws to cease the freedoms provided by tax havens (or “loopholes”). Patriotic politicians champion them as legitimate means for all Americans to protect their property from government’s confiscatory hands. Property they have a right to selfishly pursue and not sacrifice for others.
Patriotic politicians assert the facts that taxes are too high for every American and that the US tax system is increasingly tightening its strangulation on them. Patriotic politicians stop government spending, particularly on programs that redistribute wealth such as Medicare and Social Security, which would provide genuine tax deductions for everyone. Tax cuts without spending cuts are ultimately a sham. But politicians such as Rangel not only never cut spending, they continually increase it.
Instead of cutting spending, they focus on diversions from it. Instead, they paint companies seeking tax breaks as “unpatriotic,” all the while evading how our nation was founded by tax revolters. America’s original patriots defied Britain’s heavy taxation, as exemplified by the Boston Tea Party and their signing of the Declaration of Independence, which charged that among King George III’s “repeated injuries and usurpations” was the “imposing taxes on us, without our consent.”
Instead, Rangel banks on Americans accepting that these companies are unpatriotic based on their physical locations. But in the abstract, since Bermuda’s tax system reflects what America’s once was (before 1913 the income tax was never a permanent fixture), these companies are ideological brothers of our nation’s original patriots. Their relocation to Bermuda represents their tax revolt.
Many individuals, home and corporation owners alike, move from states with heavy taxation, such as New York, to states with comparatively less burdensome taxes, such as New Hampshire. According to Rangel’s illogic, these individuals “renounce” their states, and they should self-sacrificially remain in them. In reality, they’re individuals simply seeking to retain (more of) their property that our Founding Fathers upheld was their right to keep.
Ultimately, Rangel’s charges against these companies are just as irrational as the nationalist who says, “America, love it or leave it” — despite that what they want others to love contradicts America’s fundamental principles.
But if Americans are to be kept from leaving their country altogether, then what we must love is America’s founding principles, and what we must leave behind are Rangel’s tax-and-spend policies that contradict them.
References:
1. “U.S. Corporations Are Using Bermuda to Slash Tax Bills,” by David Cay Johnston, New York Times, February 18, 2002.
