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Stanley's Steaming [IBD Editorial on Stanley Tools leaving the USA]
Investor's Business Daily | May 14, 2002 | staff

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 Stanley’s will vote again), but Blumenthal’s statement reveals his true aims. The suit is a warning to Stanley and all other Connecticut companies: Pay up, or we’ll make life miserable for you.

This fuss is an ugly reminder of the war on business constantly waged by government. Today, it’s Microsoft getting steamrollered because it held a hefty piece of the market. Or it’s Big Oil, which faces price controls in Hawaii - which has the highest state gasoline taxes in the nation.

Tomorrow it’s Stanley, which will be denied the basic right to leave unless it’s willing to finish a drawn-out-fight. What’s surprising is that more people haven’t fled Connecticut’s 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.

It’s their politicians who’ve abandoned them - and freedom.


TOPICS: Business/Economy; Editorial; Government; News/Current Events; Philosophy; US: Connecticut
KEYWORDS: atlasshrugged; bermuda; blumenthal; maloney; neal; stanley; taxreform
There is something grossly unpatriotic about holding a private company hostage to the insatiable appetite of the state.

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.

1 posted on 05/14/2002 4:11:07 PM PDT by snopercod
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To: snopercod
"Stanley Works has no right to abandon their obligations as a corporate citizen of this country," mumbled Rep. James Maloney, D-Conn.

LOL! Straight out of "Atlas Shrugged".

2 posted on 05/14/2002 4:21:40 PM PDT by TheDon
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To: snopercod
shrugging.....shrugging....

Politicians are real evil dudes...and stoopid.

3 posted on 05/14/2002 4:24:13 PM PDT by dasboot
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To: snopercod
No surprises here, fascists do what fascists do and Mr blumentahl is a dyed in the wool fascist.
4 posted on 05/14/2002 4:24:24 PM PDT by jwalsh07
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To: snopercod
...more people haven’t fled Connecticut’s tax burden

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.

5 posted on 05/14/2002 4:24:45 PM PDT by Hodar
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To: snopercod
Excellent comment. Our governments, state and federal, have forgotten what it is like to fear the people. Instead, they have the mindset that we are to fear them. Our Founding Fathers were pretty wise in incorporating the Amendments to the Constitution - we would be wise to constantly remind government office-holders that we consider the Constitution the law of our land... not the office-holders.
6 posted on 05/14/2002 4:26:26 PM PDT by waxhaw
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To: snopercod
I am curious. What does a company lose when it reincorporates offshore? If nothing, why don't all companies do it?
7 posted on 05/14/2002 4:27:03 PM PDT by luckyluke
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To: Hodar
Please God, get me back to Texas and sanity.

Watch, you'll end up in Austin. LOL

8 posted on 05/14/2002 4:27:13 PM PDT by kezekiel
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To: TheDon
Yet when the companies stay here ,and sub out work formerly made here to the Commies in China, noone bleats a words about being "corporate citizens".
9 posted on 05/14/2002 4:27:43 PM PDT by L`enn
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To: snopercod
"Stanley Works has no right to abandon their obligations as a corporate citizen of this country," mumbled Rep. James Maloney, D-Conn.

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.

10 posted on 05/14/2002 4:29:18 PM PDT by Alberta's Child
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To: Hodar;Robert357
Don't forget the Aluminum companies...
11 posted on 05/14/2002 4:29:48 PM PDT by snopercod
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To: TheDon
You're right. I'm surprised that we haven't seen more of this before now.

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.

12 posted on 05/14/2002 4:30:06 PM PDT by davisfh
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To: snopercod
Bump
13 posted on 05/14/2002 4:31:08 PM PDT by Toddsterpatriot
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To: snopercod
I hope there's a congressional hearing.

Stanley rep: "Do we, the management and stockholders, have the freedom to persue our interests as we deem fit?"

congressperson: "No."

14 posted on 05/14/2002 4:32:17 PM PDT by dasboot
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To: luckyluke
What does a company lose when it reincorporates offshore?

Corporate income taxes? Annual corporation fees? Anybody?

15 posted on 05/14/2002 4:32:27 PM PDT by snopercod
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Comment #16 Removed by Moderator

To: snopercod
This means that they won't be paying taxes on foreign profits. They'll still pay taxes on profits made in the US. As a cost-cutter, this is sure preferrable to layoffs or moving the factories to China.
17 posted on 05/14/2002 4:33:56 PM PDT by Britton J Wingfield
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To: snopercod
The US government is already imposing economic santions against companies and individuals wishing to leave the country. How much longer before they ban leaving altogether?

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.

?

18 posted on 05/14/2002 4:35:12 PM PDT by monday
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Comment #19 Removed by Moderator

To: snopercod
With a corporate tax rate at 40%, and this is just the begining. Then there is social security, resale tax, tax on inventory, etc.....Very few kinds of businesses can stay in business for very long without the special tax breaks from the politicians and that costs $$$$ in the form of campaign contributions and high priced lobbyists.

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.

20 posted on 05/14/2002 4:42:00 PM PDT by SSN558
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To: luckyluke
I am curious. What does a company lose when it reincorporates offshore? If nothing, why don't all companies do it?

This could be the start of something BIG...

21 posted on 05/14/2002 4:42:53 PM PDT by null and void
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To: *Taxreform
*Index Bump
22 posted on 05/14/2002 4:45:43 PM PDT by Fish out of Water
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To: null and void
It'll be the start of something big, alright - I'm now going to wait, and see how long it takes before an "Emergency Economic Stimulus" package is passed that contains an amendement that forbids U.S. companies from leaving the country period...
23 posted on 05/14/2002 4:49:25 PM PDT by Chad Fairbanks
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To: abwehr
Pray tell what advantage does one receive from being a US citizen over, say, being a resident alien?

You get to pay US income taxes no matter where you live and work on the planet?

24 posted on 05/14/2002 4:50:42 PM PDT by LarryLied
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To: Chad Fairbanks
End of the year.
25 posted on 05/14/2002 4:51:31 PM PDT by null and void
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To: snopercod
Same old, same old from the world's communists: They erect an iron curtain and shoot you in the back if you attempt to flee their tyranny.
26 posted on 05/14/2002 4:52:24 PM PDT by LibWhacker
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To: Hodar
First, Snopercod, thank you for re-considering and keying in the article.

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.

27 posted on 05/14/2002 4:53:43 PM PDT by Robert357
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To: TheDon
Rep. James Maloney, D-Conn. had no problem with Bernard Schwartz basing Loral Aerospace in Bermuda. Bernie is the largest contributor to any political party in America history. And Democrats get nearly every dime he gives.
28 posted on 05/14/2002 4:54:19 PM PDT by LarryLied
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To: null and void
Oh, of course - there's really no guarantee that they can condition the sheep properly before the upcoming election, so I agree it will not be before November, anyway...
29 posted on 05/14/2002 4:54:20 PM PDT by Chad Fairbanks
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To: snopercod
This country is fascist, and Stanley is doing something about it. More power to 'em.
30 posted on 05/14/2002 4:59:23 PM PDT by RobRoy
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To: luckyluke
"I am curious. What does a company lose when it reincorporates offshore? If nothing, why don't all companies do it?"

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.

31 posted on 05/14/2002 5:02:01 PM PDT by monday
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To: snopercod
If it is incorporated in a foreign country, it pays U.S. tax on its income earned in the U.S. If it is a U.S. company, it pays tax on its worldwide income, subject to treaties and other provisions that reduce the impact of double taxation.
32 posted on 05/14/2002 5:27:44 PM PDT by TheCPA
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To: Hodar
This is interesting as Jackie Clegg aka Mrs Christopher Dodd took a nice position with a Bermuda based insurance company. She left the Export Import Bank as 1st VP after securing all the sweet Enron loans for China deals. Bermuda was sweet for Global Crossing and Terry "big money boy" MacCauliffe. Check out who is based in Bermuda. Check out who moved to Ireland for tax purposes. You may find more than a few Americans that turned in their citizenship for an Irish one. When they get some of these crooks stashing cash in off shore banks I will worry about Stanley.
33 posted on 05/14/2002 5:46:45 PM PDT by oldironsides
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To: snopercod
I wonder how long it will be before Microsoft gets tired of the BS and starts speaking Canadian, eh?
34 posted on 05/14/2002 5:47:16 PM PDT by Random Access
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To: LarryLied
You get to pay US income taxes no matter where you live and work on the planet?

Brother, don't I know it...

35 posted on 05/14/2002 5:59:46 PM PDT by Prodigal Son
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To: snopercod
Gotta love it. Being able to make an economic exit is one of the last things free people have these days to check a tyranical government.
36 posted on 05/14/2002 6:07:39 PM PDT by VinnyTex
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To: luckyluke
I am curious. What does a company lose when it reincorporates offshore? If nothing, why don't all companies do it?

Lose? Nothing.
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.

37 posted on 05/14/2002 6:20:56 PM PDT by balrog666
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To: Prodigal Son
Do you know if resident aliens are subject to US income tax if they are out of the country and earn money?
38 posted on 05/14/2002 6:56:14 PM PDT by LarryLied
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To: snopercod
Who can blame them, with all the confiscatory taxes, intrusive rules and regulations american businesses have to struggle under? They are just voting with their feet. It's that or die. Blame the liberals, not their victims.


Liberalism must be crushed!
The idea is catching on.

39 posted on 05/14/2002 6:56:15 PM PDT by Thorondir
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To: LarryLied
If they are outside the United States, they are nonresident aliens.

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!"

40 posted on 05/14/2002 6:57:54 PM PDT by Poohbah
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41 posted on 05/14/2002 6:58:13 PM PDT by Bob J
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To: LarryLied
Do you know if resident aliens are subject to US income tax if they are out of the country and earn money?

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.

42 posted on 05/14/2002 7:09:56 PM PDT by Prodigal Son
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Comment #43 Removed by Moderator

To: snopercod
Please guys, there is another side to this. And both sides are sinister.

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.

(Sigh)

44 posted on 05/14/2002 9:28:55 PM PDT by ReveBM
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To: snopercod
This would not need to happen if we had a FAIR tax system. www.fairtax.org
45 posted on 05/14/2002 9:32:31 PM PDT by jeremiah
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To: SSN558
More and more manufacturing businesses are becoming service industries that farm most or a large part of the high value added work overseas.

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.

46 posted on 05/15/2002 2:43:31 AM PDT by snopercod
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To: ReveBM
I understand what you are saying, but I think the manufacturing situation in the US has become far more serious than just a matter of executive perks. It' now a matter of survival for these companies.

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.


47 posted on 05/15/2002 2:56:09 AM PDT by snopercod
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Comment #48 Removed by Moderator

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