WASHINGTON (AP) - Key US Senators said yesterday that Congress must stem a tide of US companies moving to tax havens such as Bermuda, but they were less certain about what exactly should be done.

At a hearing on corporate tax shelters, members of the Senate Finance Committee expressed outrage that toolmaker Stanley Works, industrial concern Ingersoll-Rand and other companies were reincorporating in Bermuda to save millions of dollars in US taxes and regulations.

At one point, Sen. Charles Grassley held aloft a Stanley saw and said the move raises questions about the company's patriotism.

"I hope people will remember this when they shop for the products this company makes," Grassley said. "Their heart doesn't seem to be in America and they're getting their rear ends out.

"From what I have seen, these deals look like shams," he said. "I have also heard there may be an effort to rush these deals to market before Congress cracks down on them. Let me be clear to everyone developing or contemplating one of these deals, you proceed at your own peril."

Like others making the legal move to Bermuda, Stanley officials acknowledge significant tax savings - in Stanley's case, about $30 million a year. But they say the proposed shift also will improve the company's ability to compete worldwide and retain thousands of jobs in the United States. In most cases, the Bermuda setup is only a shell, with the company's main operations left in this country.

"I think it's clear the motivation is to avoid US taxes and regulations," said Democratic Sen. Bob Graham.

Grassley and the committee's chairman, Democrat Max Baucus, said they will introduce legislation to address the Bermuda exodus, as well as the broader problem of business transactions set up mainly to avoid federal taxes.

But neither Senator outlined exactly what their legislation might entail. Grassley did suggest that companies relocating to Bermuda might be barred from receiving federal contracts.

Access to US capital markets to companies that make the move to cut their tax bill could also be barred.

Baucus said that the committee should consider legislation to put a brake on the potential rush to move US companies to tax havens, but he added: "I also understand that, over the long term, we may need to consider whether the structure of the US tax rules creates an incentive for US corporations to shift their operations in order to remain competitive."

Mark Weinberger, assistant Treasury secretary for tax policy, told the committee the administration will quickly complete a study of the issue.

The administration on Wednesday made a series of broader proposals, some of them requiring congressional approval, intended to increase disclosure of corporate tax shelters to the Internal Revenue Service.

Mark Weinberger, assistant Treasury secretary for tax policy, said there is a "significant trend'' of US companies reincorporating offshore. Congress should be careful not to act in ways that hurt US companies ability to compete with international rivals, he said. "The question for us all to consider is what are the alternatives,'' Weinberger told the committee. "We don't want to create an environment in a global economy that disadvantages US businesses either.''