A SECOND bill aimed making a law to prevent companies from avoiding US taxes by registering in Bermuda has been put forward in Washington.

In simple terms, the proposed legislation would force US companies which registered on the island to be continue to be treated as domestic companies for tax purposes.

Republican Congressman Scott McInnis introduced the bill in the House of Representatives last week.

The bill came hard on the heels of a similar piece of proposed legislation introduced by Representative Richard Neal, who wants to create the "Corporate Patriot Enforcement Act 2002".

Both bills have been referred to the powerful House Committee on Ways & Means, which controls the Congressional purse strings.

The moves reflect the gathering strength of feeling in the US since September 11 against companies moving offshore to avoid paying millions in taxes, while the country is at war.

Those feelings were exemplified by a front-page story in the New York Times, claiming that profits were coming before patriotism for companies who relocated to cut tax bills.

The McInnis bill would apply to all companies who registered in Bermuda and other jurisdictions outside the US since the start of this year.

The companies targeted by the bill are domestic corporations which register offshore but which retain 80 percent of their former shareholders, by vote or value.

But the legislation includes a lower stock ownership test - 50 percent instead of 80 - for companies that have less than ten percent of their workforce permanently located overseas or that derive less than ten percent of their gross income from the country in which they are based.

However, there was also support voiced for low-tax jurisdictions in Washington this week, from lobby group The Center for Freedom and Prosperity.

The group's president Andrew Quinlan said: "Fiscal protectionism is bad policy and the Center for Freedom and prosperity will oppose and work vigorously to defeat any legislation seeking to stifle tax competition."

And Heritage Foundation Senior Fellow Daniel Michell pointed out: "All corporations, regardless of where they are based, pay tax to the IRS on all profits they earn in the United States."

Mr. Mitchell refuted the claim that US companies who set up offshore were unpatriotic because they were avoiding paying taxes on income earned outside the US.

"America should not be taxing income earned in other nations," said Mr. Mitchell. "If politicians want to preserve bad tax law, they are the ones who should be blamed when companies are forced to relocate."