As an update to the column I wrote about Bermuda not being a tax haven, I thought it would be interesting to note that Stanley Works recently announced that it was going to eliminate 1000 jobs and close four plants and five warehouses to cut costs. The cost to the United States taxpayer is $60 million! Compare that to Stanley Works' desire to invert its headquarters to Bermuda to save $30 million in taxes last year. The arithmetic does not add up.

So for groups like the Bermuda Project Team and the politicians who are pushing for `patriotism' over cost savings in the worst economy since the Great Depression, I wonder if they will now help those 1000 workers who lost their jobs to find new jobs. Koshea Scott, Bermuda Crown Counsel, sent me a very insightful website talking all about the pros and cons of corporate inversions, www.cato.org/events/transcripts/020626-derugy.ppt . The website points out the pros and cons of corporate inversions but more specifically states that inversions are a direct response to overburdened tax policies imposed by the United States which has the effect of retarding the competitiveness of its own home grown global corporations. Inversions are a necessary means for large United States domiciled companies to remain competitive with their foreign competitors who are not taxed on worldwide income as are all United States based companies.

The website states, "Inversion is the expression of the right of people and their property to move freely." I think this sums up the twisted nature of the people who are fighting for the elimination of so called tax havens like Bermuda when I'm sure they are the first to claim that America is the land of the free and everyone has a right to freedom of speech and expression. They can't have it both ways if they want their country to continue to be able to provide jobs and companies to return profits to the expectations of the investment community.

The site also states that according to the National Foreign Trade Council (NFTC - a business organisation founded in 1914 by a group of American companies that supports an open world trade system and advocates a rules based world economy), "over the past 4 years, 80 percent of all large acquisitions involved foreign companies buying United States companies."

In my opinion, this trend is likely to continue as large United States corporations look for ways to move their headquarters outside the United States to avoid paying taxes on all of their income.

In addition, not only will the Unites States lose its large corporate names to those of foreign companies, they may soon find that there will be no new corporations with worldwide operations incorporating in the United States because of the high costs of taxation.

For companies to elect to invert their headquarters outside the United States, they must be desperate because these structural changes are expensive, time consuming and very complex.

In addition, because of the emotion involved with patriotism at the moment, companies must also be willing to endure the stigma that will be attached to their name by such groups as the Bermuda project. Stanley Works tried to exercise its right to move freely while at the same time keeping people employed and maintaining its presence in the United States by inverting its headquarters in Bermuda. Unfortunately because of the emotions involved, its board felt pressured to remain in the United States and as a consequence of this bullying tactic, 1000 American tax paying citizens have lost their jobs. The cost to the Bermuda economy because Stanley Works elected to remain in the United States, is negligible.

Bob Stewart, author of A Guide to Bermuda's Economy, sent me an email stating, "All countries are tax havens relative to the most heavily taxed nation. The biggest tax haven in the world is the USA and the biggest island tax haven is Manhattan. Bermuda and others are positive contributors to the economic welfare of the global economy by continuing to have their main source of taxation consumption taxes not income or corporate taxes. Instead of being embarrassed by this fact, Bermuda should trumpet the fact that it is continuing the tradition started by the United States by kicking out the high tax government of George III."

So perhaps I was wrong in stating that Bermuda is not a tax haven because it is when it is compared to other countries around the world. What I should have said is that Bermuda is used as a tax haven by those United States companies in direct response to punitive tax measures put into place by their own government. We don't ask them to come here. We don't promote ourselves as a tax haven. We promote ourselves as an island that is user friendly for corporations seeking to develop their business across the globe. We are the boundary less society, which allows large global conglomerates to be just that, global.

Someone suggested that the title of my column or a Bermuda campaign against the patriotism fight by a few special interest groups who make their money through waging such campaigns should be, "Keeping your job is patriotic." I would just add - ask the 1000 Stanley Works workers who just lost their jobs due to their company remaining patriotic to the special interest groups and not to the welfare of its employees or keeping their operations in the United States.

Cathy Duffy is a Chartered Property Casualty Underwriter (CPCU) and is now a freelance writer. She is a former executive of Zurich Global Energy and has 15 years experience in the insurance industry. She writes on insurance issues in The Royal Gazette every Monday. Feedback crduffycwbda.bm