The Heavy Hand Of The Regulatory State Strikes Again
(Redstate Network) on Featured Stories
And does so with a healthy side order of xenophobia (read on):
"Halliburton Co., currently the largest military contractor in Iraq with billions of dollars in Pentagon contracts, announced Sunday that it was planning to move its CEO and corporate headquarters from Houston to Dubai, the United Arab Emirates.
The move could eventually save the firm a fortune in U.S. taxes, but it is raising serious questions about its priorities and prompting at least one possible congressional hearing.
Dave Lesar, Halliburton's chairman, president and chief executive officer, made the announcement at an energy conference in the Kingdom of Bahrain.
Lesar said the goal of the move was to focus on Eastern Hemisphere "oil exploration and production opportunities, and growing our business here will bring more balance to Halliburton's overall portfolio."
Run by Vice President Dick Cheney from 1995 to 2000, Halliburton has a five-year, $16 billion contract with the U.S. Army and total revenues of $22.6 billion in 2006.
Energy analyst Roger Read says if the company formally incorporates itself in the U.A.E., the banking mecca of the Middle East, company profits will soar.
"You'd probably be looking at a tax savings of several hundred million [dollars]. ... It's a win for the shareholders," Read said."
And of course, we can't have that.
"Outrage over that possibility had Halliburton scrambling Sunday to explain it had no plans to incorporate abroad. Still, Democrats are suspicious.
"For one of the largest contractors with the United States government to move its headquarters overseas? [It] just doesn't look good, doesn't sound good, doesn't smell good," said Sen. Chuck Schumer, D-N.Y.
The move may raise serious national security questions too, as happened last year with the canceled port security contract with another U.A.E.-based company, Dubai Ports World. Congressional outrage scuttled that deal; Halliburton will now have some explaining to do to avoid similar scrutiny.
"Obviously a company that has its headquarters overseas should be given a little more scrutiny than an American company," Schumer said. "No question about it."
This, of course, is the same kind of xenophobia that was evident in Congress's treatment of the Dubai Ports World deal. And that wasn't exactly a shining moment in governance.
It is, quite simply, none of Congress's business if a company wants to move outside of the United States and help its shareholders in the process. Doing so is neither an act of disloyalty nor an indication that disloyalty is afoot. If Congress is upset that firms are seeking tax advantages by moving out of the country, it can, of course, ameliorate the situation by making the tax system competitive enough to entice firms to stay. But evidently, that is too much to ask.
It is stories like this that cause me to wonder how someone as smart as Tyler Cowen can be so sanguine about the growth of the regulatory state. It is one thing not to lose perspective on regulations and excessive "oversight." It is another thing altogether to turn a blind eye to it. To be sure, a lot of Professor Cowen's thoughts on the state of classical liberalism ought to be taken very seriously and are on point. But the regulatory state has not been defanged. We should stop pretending otherwise. redstate.com |
