Skip to comments.Stanley's Steaming [IBD Editorial on Stanley Tools leaving the USA]
Posted on 05/14/2002 4:11:07 PM PDT by snopercod
Revenue: Weary of high taxes, a famous old-line company wants to leave the U.S. Public officials reaction reveals an all-too-common mind-set in the halls of power.
Stanley Works, the New Britain, Conn., toolmaker, announced in February that it had plans to reincorporate offshore. The move would save the company $30 million a year in taxes. Last week, shareholders approved a paperwork relocation to business-friendly Bermuda.
The possibility has energized the political class. They see a cash cow about to jump the fence.
"Stanley Works has no right to abandon their obligations as a corporate citizen of this country," mumbled Rep. James Maloney, D-Conn. Abandon their obligations? What, to be taxed at punitive rates so that Maloney and his colleagues can hand out costly favors to their voters?
Particularly irksome is the scolding by Rep. Richard Neal, D-Mass, who blustered that "during this time of war" Stanley has "chosen profit over patriotism and turned their back on the United States."
Elected officials are, sadly, the blindest among us. Are the companies that seek greater economic freedom turning their backs on the U.S.? Or is the lawmakers, who demand hefty tribute for the right to do business in an ostensibly free country? There is something grossly unpatriotic about holding a private company hostage to the insatiable appetite of the state.
Conneticut Attorney General Richard Blumenthal revealed that he holds a similarly distorted notion of patriotism when he declared that Congress "should close the federal tax loophole that is motivating Stanley Works to abandon America and Connecticut."
Particularly galling is that to these politicians the company is to blame, not the high taxes imposed by those selfsame politicians.
Note that Blumenthal talks of abandonment, as did Maloney. The dangerous assumption is that Stanley owes society. Yet last time we checked, the consent of the governed was still required here.
While Congress considers legislation that would stop companies from moving overseas, Blumenthal is using his office to do something about it. He filed suit last week against Stanley, alleging that the information given to shareholders concerning the vote intentionally confused them.
We believe in informed shareholders (and Stanleys will vote again), but Blumenthals statement reveals his true aims. The suit is a warning to Stanley and all other Connecticut companies: Pay up, or well make life miserable for you.
This fuss is an ugly reminder of the war on business constantly waged by government. Today, its Microsoft getting steamrollered because it held a hefty piece of the market. Or its Big Oil, which faces price controls in Hawaii - which has the highest state gasoline taxes in the nation.
Tomorrow its Stanley, which will be denied the basic right to leave unless its willing to finish a drawn-out-fight. Whats surprising is that more people havent fled Connecticuts tax burden, Indeed, the Tax Foundation points out that May 14 is Tax Freedom Day for NutmegStaters - the latest in the nation. Those "lucky" citizens now can start working for themselves, not government.
Its their politicians whove abandoned them - and freedom.
I beg to differ. Forcing companies to serve the government was considered very patriotic in Hiter's Germany, Mussolini's Italy, Mao's China, and Kruschev's Soviet Union.
LOL! Straight out of "Atlas Shrugged".
Politicians are real evil dudes...and stoopid.
Connecticut is #1 in taxes, but the People's Republic of Washington is #2, and we are going to be #1 soon. Despite losing Boeing to Chicago, the demise of the dotcom's and having the worst unemployment in the USA; Washington has plans for additional gas taxes (10 cents a gallon increase), additional transportation taxes, and increasing taxes on electricity, natural gas, and property. Woo-hoo, we are going to drive every company out of Washington; then are going to cry about how unfair it is for these companies to leave. Personally, I'm hoping to relocate this summer. Please God, get me back to Texas and sanity.
Watch, you'll end up in Austin. LOL
What is particularly ironic is that the State of Connecticut would have fallen all over itself in an attempt to lavish the company with tax breaks and special exemptions if Stanley had threatened to move to Alabama instead of Bermuda.
I certainly don't know all the ins and outs of this business, but it occurred to me several years ago that Bill Gates might decide to relocate offshore. Don't think that it would be a big problem with the technology that we have nowadays. Want software? Just download it off the internet for a price.
Stanley rep: "Do we, the management and stockholders, have the freedom to persue our interests as we deem fit?"
Corporate income taxes? Annual corporation fees? Anybody?
The question must be asked, do people and companies belong to the government of the United States? Do we exist for their benefit That is what the politicians seem to think.
A tool maker is dependent on heavy capital investment and this is just the type of business that can't stay in business very long in the once great USA. The only way a manufacturing business can profit is from taking government contracts or corporate welfare. More and more manufacturing businesses are becoming service industries that farm most or a large part of the high value added work overseas. The liberals have destroyed the major economic engine of the US with taxes and the lower middle class and poor are the ones that really get the shaft. America can't compete.
This could be the start of something BIG...
You get to pay US income taxes no matter where you live and work on the planet?
As some what from Washington (the state), I think Boeing is a great example of business telling government to shape up or they will walk. I also think that Government in general and democrats in particular have not a clue as to how easy it would be for many of us to incorporate overseas and continue to do buisiness via the internet in the highly taxed US. Government needs to understand at some point that it must adopt "best practices" and become cost competitive or else all the good people and all the good businesses will leave for a better place.
I am finally reminded of the UK many years ago during the brain drain when anyone with any skills and any money left the UK to avoid their confiscatory taxes. The Brits were repeatedly outraged when their brightest scientists and engineers left and their stars of stage, screen and records left for other countries. They just couldn't understand why folks didn't tough it out. Every year when I do my taxes and wonder if I will be tagged this year with the alternate minimum tax, I wonder what I would do if and when it triggers.
The reasons have more to do with what you don't get than what you lose. Companies accounting and taxes become much more complex. But the real reason most companies don't move offshore is that they would still have to pay tax on US based income. If most of a companys income is US based, then there is not much savings.
Brother, don't I know it...
Gain? Paperwork increase.
Unless you some substantial business in foreign countries. If so, it saves you from paying income tax to the USA on income earned overseas. If all of your income derives from domestic sales, it saves you nothing although moving your state of incorporation can mean a lot in both taxes and management protection.
If they are resident, they get taxed on every dime they make inside and outside. If they are nonresident, then they taxed only on US sources of income.
I'm just waiting for the IRS to announce in Zero Wing style to the world "All Your Money Are Belong To Us Now!"
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No, sorry, I don't. My wife is German and has a number like a social security number because we have a joint US mutual fund account and if I want to file as married she has to list her income, although she pays taxes on it here. I pay taxes to the UK on what I make here because I am a legal resident.But I still have to file in the US- although I don't think I would necessarily have to pay (except for those pesky mutual funds). We've been thinking about just divesting ourselves of any States' side assets simply to avoid the accounting costs. You have to renounce your citizenship before you aren't required to file a tax return. In this manner, the USA is really oppressive. I haven't used any public service in the States in over ten years but I have to put out my good money to file my return (even if I don't pay a dime in tax).
As far as the resident alien thing- it seems like if they aren't physically in the US they can't actually be resident, even if they have that legal status. I don't see how you could require it- what would be the logical basis for it? They're not a citizen and they aren't physically in the country. At any rate, what the IRS doens't know won't hurt them.
We have a corporate class of managers in America who see themselves as belonging to no nation at all, but rather "Citizens of the World". In general, most companies with managers of this type have no qualms about selling "dual use" technologies to Communist China that could be used very effectively against us in weaponry of the future (I don't think Stanley Works is one of them...somehow I don't see the commies taking us out with hand tools).
Everything is the bottom line to them, and mainly it's their personal bottom line. Their stock options. Their salary. Their golden parachutes. Fuck America.
I have a dream of a golden past, which probably never existed...
1) Of politicians who tread lightly on citizenry because they believed in limited government.
2) Of red-blooded American company managers who wanted the best products in the world to be made by American hands in America, and made it so.
See, you guys don't get it. Whether we blame the politicians or the corporate bigwigs we are on a sinking ship. Everyone in power appears to be in it for themselves.
Thank God that Americans like Johnny Mike Spann still exist, or Todd Beamer. Too bad they're dead and can't lead companies or run for office...though they'd probably stay away from that cesspool anyway.
I have a neighbor who works for CooperTools [Crescent wrenches, Channel-Locks, etc.]. They are being forced to little-by-little move production overseas. They really want to stay here, but won't stay in business if they do.
Just out of curiousity, have you ever read Atlas Shrugged? Short sample:
For centuries, the battle of morality was fought between those who claimed that your life belongs to God and those who claimed that it belongs to your neighbors - between those who preached that the good is self-sacrifice for the sake of ghosts in heaven and those who preached that the good is self-sacrifice for the sake of incompetents on the earth. And no one came to say that your life belongs to you and that the good is to live it.
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