Some politicians are denouncing Halliburton for moving its headquarters to Dubai, but this is not a full-fledged corporate "expatriation." Halliburton is only moving its headquarters, not its place of incorporation. Under US tax law, Halliburton will continue to be taxed on its worldwide income so long as the company is still chartered in Delaware. The move does not save the company one penny, at least from a tax perspective. To advance the interests of shareholders, however, the company should seek to change its place of incorporation. America's worldwide tax system, combined with a high corporate tax rate, make it very difficult for multinational companies to compete in global markets. Unfortunately, it is now increasingly difficult to escape the Berlin Wall of American taxation, though Halliburton executives presumably are looking at the options. The politicians, meanwhile, should stop demagoguing the company and instead lower the coporate rate and shift to a territorial tax regime so that American companies can compete on a level playing field. ABC News reports:
The much-maligned defense contractor Halliburton is moving its corporate headquarters from Houston to Dubai in the United Arab Emirates. ...Sen. Patrick Leahy, D-N.H., called the company's move "corporate greed at its worst." ...Fellow Democratic Rep. Henry Waxman, D-Calif., who chairs the House Oversight and Government Reform Committee, which has investigated contractor fraud, is planning to hold a hearing. "This is a surprising development," he said. "I want to understand the ramifications for U.S. taxpayers and national security."