Last week's hearing of the powerful tax-writing Ways and Means Committee to explore the “growing trend towards offshore incorporation” was viewed as a positive start by a leading advocate of free-market policy.

The hearing last Friday followed the ongoing debate over so-called “corporate inversions” - as a means for corporations to trim their tax bills - which has been at the forefront of American politics and in media reports since early in the year.

The hearing heard testimony from Pamela Olson, acting assistant secretary for tax policy at the US department of treasury. The treasury last month released a study into the matter.

In her testimony, Ms Olson called for action but also warned lawmakers against attempting to erect a “Berlin Wall” to stop companies from using inversions to lower their tax bills.

Other witnesses - Gary Hufbauer, senior fellow, Institute of International Economics, Steven Salch, partner, Fulbright & Jaworski, LLP and Richard Blumenthal, Connecticut attorney general - were also appointed to the panel but the hearing got cut short and only heard testimony from Ms Olson.

Mr. Blumenthal has been critical of Connecticut-based Stanley Works' as one of the corporations who have attempted to move to Bermuda.

Andrew Quinlan - who is president of the Washington-based Centre for Freedom and Prosperity and a vocal supporter for reform of what he has called a “Draconian” US tax code - said: “I was very happy with the comments made by treasury representative Pamela Olson at Friday's hearing.