US President George W. Bush signed into law last week a corporate tax break bill that will allow US companies to better compete in the global economy. It is a law that Finance Minister Paula Cox said earlier this month will help resolve the controversy over corporate inversions "that has unfairly buffeted Bermuda over the last few years".

Bloomberg News reports that the US President HR 4520, the American Jobs Creation Act of 2004, aboard Air Force One as he began a campaign swing through Pennsylvania, Ohio and Florida. It is the biggest rewrite of the corporate tax code since 1986 replacing an export tax subsidy that violated international trade rules with a $145 billion package of new corporate tax cuts.

The bill makes it more costly for companies to move from the US to jurisdictions such as Bermuda, making it less attractive for corporate inversions.

The benefits also include a one-year opportunity for multi-national companies to return foreign profits to the US at a tax rate of 5.25 percent, instead of the usual 35 percent rate. Most companies now leave foreign profits abroad to avoid the 35 percent US tax.

Bloomberg reports, however, that the bill may be short-lived if President Bush does not sit in the White House after the November election. Jason Furman, economic policy director for Democratic presidential nominee John Kerry, told Bloomberg that the four-term Massachusetts senator would seek the repeal of those breaks if he is elected President.

"What John Kerry would do now is go back and repeal all the unwarranted international tax breaks in the bill,'' Furman said.