If you think that getting to grips with current developments in the US tax code is challenging, take heart from the fact that even US commentators and tax experts are confused at the moment.

In particular, some want to know what happened to the idea that proposed dividends cuts would not be available to companies based offshore in countries like Bermuda.

Treasury reformers originally said that companies like Tyco and Ingersoll-Rand should not be eligible. They suggested that this would lead to pressure from shareholders to move back to the US because that would be the only way to benefit from the tax-free dividends.

However, all these conditions now appear to have been dropped from the dividend tax cut proposals. On the face of it, shareholders of Bermuda-based US corporations will be able to receive tax free dividends, just like any corporation based in the US.

Newsweek's Wall Street editor, Allen Sloan, pointed out last week, the whole reason to eliminate taxes on dividends was supposed to be to stop double taxation, which is widely regarded as poor tax policy.

President Bush and his advisors argued that double taxation was occurring in the US when a corporation paid income tax on its profits and then shareholders paid income taxes on dividends that were paid out of those profits. This was unfair, they asserted, corporations should only be taxed once.

But in the case of corporation based in a low taxation jurisdiction such as Bermuda, the only time the profits of that company were taxed was at the personal dividend level. So if the dividends are now tax free, that means no taxation.

As Mr. Sloan comments: "Having used the "double taxation" argument to sell the cut, the administration isn't insisting on "once and only once" taxation. It's perfectly happy to have no taxation."