Tuesday, September 22, 2009

Headquarters Or Foreign Outpost

Usually, a building that takes on the name of its occupant would be considered an important site. A corporation having offices on several floors of a downtown skyscraper suggests the main headquarters, where the top executives gather in corner offices with grand views.

That's what you might have thought when you heard that Willis Group Holdings was moving in to Chicago's Sears Tower. And claiming that they were changing the building's name, as if the people of Chicago would go along with it like meek sheep at the former Union Stockyards.

The Sears Tower location isn't Willis Group's corporate heart at all. No, that heart is in Ireland. The big building in Chicago is nothing more than a foreign outpost.

For tax purposes, the Willis Group had incorporated in Bermuda, but President Obama vowed to crack down on such tax havens.

The Willis Group is now an Irish corporation. Joseph Plumeri, CEO, believes that Ireland provides economic benefits, and a low corporate tax rate is unquestionably a huge benefit as compared to corporate taxes in the U.S.

They'll find plenty of company in Dublin, where four other major multinational corporations have moved operations for tax purposes. The idea that putting the screws to firms in Bermuda, in order to coerce them into relocating to the U.S. and bringing their tax dollars with them, has turned into a boon for Ireland.

The Celtic Tiger was nourished on the 12.5% corporate tax rate, and the drive by the U.S. government to push the corporations out of Bermuda is like a transfusion for a faltering Irish economy.

Who would have guessed that a decision to increase revenues in the States would have such a beneficial effect on the Irish Exchequer?

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