Neal: Corporate expats won $1.5b in contracts in 2002
Companies that have moved their headquarters out of the United States to avoid paying their taxes received nearly $1.5 billion in contracts from the federal government in 2002, Rep. Richard Neal said on Monday.
Congressman Neal has been trying to revive anti-inversion bills that hit what he calls "unpatriotic" companies who have moved offshore to places like Bermuda. But they have been stalled at every turn for the past year and a half - despite his supporters best efforts on Capitol Hill to penalise companies who have left the US in a bid to lower their tax bill.
"If the American taxpayer wasn't already outraged about corporations moving offshore to avoid paying their fair share of taxes, the $1.5 billion in federal contracts that corporate expatriates won last year will surely do it," Mr. Neal (D., Massachusetts), said in a statement released by his office. Contracts went to build nuclear facilities, guard government buildings, provide veteran health care, landscape the national parks - and help the Internal Revenue Service collect taxes, he said.
"These financial traitors have punched a $5 billion hole in our federal treasury, then pour salt on the wound by profiting from more than $1.4 billion in US federal government contracts last year, 77 percent of which were defence or homeland security related," Mr. Neal said.
The single largest beneficiary on Mr. Neal's list is Accenture Ltd., a consulting firm spun off of Arthur Anderson and incorporated in Bermuda in July 2001.
The consulting firm received $450 million in federal contracts, $250 million of which were defence and homeland security related, Mr. Neal said. In its defence Accenture has said it has never been a US corporation - and that it located its headquarters in Bermuda to reflect the international nature of its business.
It says Mr. Neal and others are unfairly targeting it for criticism. Mr. Neal also included in his list McDemott International Inc., which reincorporated in Panama in 1983. The company received $340 million in federal contracts, all of which were for defence and homeland security contracts. Bermuda-based Tyco International Ltd. and Foster-Wheeler Ltd. received $332 million and $293 million in contracts respectively.
Tyco says it did not reincorporate in Bermuda, but when it merged with a Bermuda company, took on Bermuda as its headquarters. Foster-Wheeler was one of a dozen companies to reincorporate in Bermuda just before and after September 11, 2001, a move which has sparked the anti-offshore and anti-Bermuda tirade coming from Washington. Most businesses that move their headquarters abroad argue that they did so because US regulations and taxes put them at a competitive disadvantage.
Foster-Wheeler said its decision to move their headquarters from New York to Bermuda was based on "the business, regulatory and tax environment in Bermuda will enable us to achieve more flexibility" and thus improve shareholder value.
Most of the companies that have moved offshore keep "operational headquarters" or "world headquarters" in the US location where they were originally incorporated raising the hackles of Congress. "The data shows that these expatriate US companies compete directly with American companies employing American workers, who risk losing their jobs if we continue to subsidise this run offshore," Mr. Neal said.
