By Lilla Zuill -
A bill from 'Golden State' legislators that aimed to make companies that move offshore to so-called 'tax havens', including Bermuda, pay full California taxes was narrowly shot down last Thursday. But it could come up again this week.
Democratic assemblywoman Judy Chu put forward the bill but it was rejected on a 48-26 roll call. It needed a mere six votes more to pass.
State news reports said that supporters were hopeful that the bill – which would prevent corporations from avoiding California taxes when they move their headquarters overseas – would have passed, but that it had another chance this week.
State Treasurer Phil Angelides, who supports the bill and has been campaigning against so-called 'corporate inversion' companies for more than two years, said he hoped lawmakers would reconsider and pass the measure. The bill was said to need at least a two-thirds majority of 54 votes to move to the California Senate.
Mr. Angelides has in recent years been behind or supportive of numerous measures to crack down on the activities of companies that move their place of incorporation offshore to shave their US tax bill, while leaving their operations in the US.
Companies that inverted to Bermuda have come under fire from politicians and the US media, but there have reportedly been no companies to 'invert' to the Island since 2001.
But Mr. Angelides has continued his efforts to crackdown on the practice, from limiting the award of Government contracts – with Bermuda insurers Everest Re and PX Re being barred from participating in a state contract pool for earthquake coverage – to proposing that state pension funds not invest in companies that reincorporate offshore.
Everest and PXRe moved to Bermuda in 2000 and 1999 respectively.
Mr. Angelides said the bill that lost last week would have prevented 18 corporations that have relocated their headquarters "to tax havens like Bermuda and the Cayman Islands from avoiding their fair share of California taxes", in a news report.
In addition, supporters of the bill said its passing could generate $132 million over the next ten years by levying 'inverted' firms with the same taxes as domestic companies.
Previously, Mr. Angelides said: "American corporations that renounce their corporate citizenship should not enjoy the privilege of doing business with the state of California."
Source: Bermuda Royal Gazette
