Last week's hearing of the powerful tax-writing Ways and Means Committee to explore the "growing trend towards offshore incorporation" was viewed as a positive start by a leading advocate of free-market policy.

The hearing last Friday followed the ongoing debate over so-called "corporate inversions" - as a means for corporations to trim their tax bills - which has been at the forefront of American politics and in media reports since early in the year.

The hearing heard testimony from Pamela Olson, acting assistant secretary for tax policy at the US department of treasury. The treasury last month released a study into the matter.

In her testimony, Ms Olson called for action but also warned lawmakers against attempting to erect a "Berlin Wall" to stop companies from using inversions to lower their tax bills.

Other witnesses - Gary Hufbauer, senior fellow, Institute of International Economics, Steven Salch, partner, Fulbright & Jaworski, LLP and Richard Blumenthal, Connecticut attorney general - were also appointed to the panel but the hearing got cut short and only heard testimony from Ms Olson.

Mr. Blumenthal has been critical of Connecticut-based Stanley Works' as one of the corporations who have attempted to move to Bermuda.

Andrew Quinlan - who is president of the Washington-based Centre for Freedom and Prosperity and a vocal supporter for reform of what he has called a "Draconian" US tax code - said: "I was very happy with the comments made by treasury representative Pamela Olson at Friday's hearing.

Her comments on the inversion issue - and namely on the Grassley, Baucus and Neal-Maloney bills - were that it would be the wrong way to go and that the Treasury would not support those measures," he said.

Mr. Quinlan added however that Ms Olson had not ruled out a moratorium on corporate inversions - as proposed in a bill tabled in the House by Rep. Nancy Johnson - as a stepping stone to reform, with the long-term mandate to pass new corporate tax rules.

Mr. Quinlan said on that score that he did not support the idea of a moratorium: "One can't wave a magic wand and say the economy should stop," he said.

In recent months, Mr. Quinlan has called the bills tabled on the issue - in both the US House and Senate - as "bad, bad tax policy". And questioned whether the laws would even be considered in compliance with World Trade Organisation tenets.

Mr. Quinlan said this week that he expected there would be further hearings on the matter but at the Ways and Means sub-committee level. Last week's hearing was held before the full committee.

Mr. Quinlan said the real answer, and the point his organisation attempted to make on Capitol Hill, was to change the "Draconian" US tax code to make it attractive for US companies to remain in America.

Mr. Quinlan has also challenged the growing public sentiment that companies moving offshore were "unpatriotic."

He said: "These companies have a fiduciary responsibility to get the highest return for shareholders. These companies are being patriotic to their American shareholders by providing the highest return. US companies incorporated overseas do pay US taxes, the only thing they are not paying is taxes on foreign income. Mr. Quinlan, who said earlier in the year that fighting such legislation would be a top priority for his organisation, concluded: "We still have a long way to go".