The Connecticut House of Representatives last week passed a bill that will forbid the state to sign a contract with a publicly traded company that has reincorporated outside the United States.

When Stanley Works said last year that it was reincorporating in Bermuda to save $30 million in taxes, it set off a firestorm of protest that forced company officials to abandon their plan.

The bill signed last week, passed largely along party lines, provoked a philosophical debate over whether the state has the authority to withhold contracts from companies because of where they are incorporated. In the 96-47 vote, eight Republicans voted in favour and one Democrat voted against.

"The bill before us will send a message to corporate America that America should come first,'' Rep. James A. O'Rourke III was quoted in The Hartford Courant. "As elected officials, we're going to say, `Enough is enough!' We aim to discourage these companies from moving offshore and we intend to do that by not doing business with them.''

According to the Courant, Republicans worked away at the bill for nearly two hours, questioning whether the state has the authority to regulate interstate commerce.

Some said that only the federal government has the power, under the US Constitution, to regulate business transactions by the multi-national corporations.

It was also charged that the bill, by only affecting publicly traded companies, contained large loopholes.

At least 18 corporations, most of which have an offshore in Bermuda, would be placed on that state's list, lawmakers said. They said most of the companies have only a post office box in an offshore tax haven, while the chief executive continues working in the US.