AMERICA is the world's greatest offshore tax haven and US politicians should bear that in mind as they consider legislation to punish companies which reincorporate in Bermuda for tax reasons, says a leading American businessman and columnist.

James C. Bennett, in his weekly column on politics and foreign affairs for United Press International, The Anglosphere Beat, also said the US had interest in steering financial business Bermuda's way instead of allowing it to go to jurisdictions that were less co-operative on security matters.

As well as being a writer, Mr. Bennett is also an experienced businessman who has been president of International Transactions Transnational, Inc. for five years and has been involved in the high technology and international communications business since 1978.

The US Senate this week passed a motion that would prevent US companies that have moved to Bermuda from receiving any of the billions of dollars' worth of contracts due to be given out by the new Homeland Security Department.

It was a motion that had already been passed by the House of Representatives and now requires only the signature of US President George W. Bush to become law.

It was the latest development in the "patriotism versus profits" debate that has raged in the US as companies try to cut their tax bills at a time when the country is fighting an expensive war on terrorism.

In his column, Mr. Bennett wrote: "Despite all the recent rhetoric about Bermuda incorporations and offshore tax havens, the fact of the matter is that America is the world's greatest offshore tax haven and profits greatly from it."

He explained his argument thus: "America is not in the top ranks of world taxers and regulators (taxation being viewed as a special case of regulation), but rather in the middle ranks, in general. Continental Europe and many other nations are substantially higher taxers.

"Thus Continental Europeans, Latin Americans and many others worldwide find the United States to be a welcome tax haven. This has been a not-inconsiderable factor in the inflow of foreign funds over the past decade, an inflow that has balanced America's large, perennial trade deficit.

"Of course, like all great tax havens, America does not require its financial institutions to report earnings to foreign governments, much to the annoyance of those governments."

Mr. Bennett even suggested that big financial business coming to Bermuda could be viewed as beneficial to Washington, bearing in mind American efforts to keep track of terrorist money around the world.

"Particularly in the post-September 11th world. America has an interest in steering as much legitimate international financial activity to venues like Bermuda and the Caymans, which co-operate with America on critical security matters, and away from the sleazier venues, which do not," wrote Mr. Bennett.

"Of course, if we found offshore tax havens undesirable, we could reform the American tax code, which would make us an even more desirable destination for those footloose euros."

Finance Minister Eugene Cox this week said the Government was doing "everything prudent and possible" to protect Bermuda's interests in the "politically charged debate that has developed around this issue".

"The Government of Bermuda has always stated that if the process of corporate inversion is, from the perspective of the US, a problem it is a problem caused by the US tax code and not by Bermuda," said Mr. Cox.

"The very high profile that has been given to the process of US corporations inverting to Bermuda would suggest that the number of companies involved is very large and forms a significant part of Bermuda's international business. This is not the case.

"The numbers are, in fact, very small and this business represents a very small component of all business conducted in and from Bermuda by international companies."

Mr. Cox's statement went on to say that USA Today had reported that only 24 US companies had repatriated since 1993 - and only some of those to Bermuda.

"This is not to say that the issue is not being treated seriously," added Mr. Cox. "Rather, Government has attached high priority to the matter and will continue to do so in order to preserve our jurisdiction's good reputation and to safeguard the interests of Bermuda and its people."