Stanley Works Drops Move to Bermuda

Stanley Works, one of several major companies facing a public firestorm over plans to move its headquarters to Bermuda to save on taxes, announced late Thursday that it was withdrawing the proposal.

The decision could put pressure on other firms that have moved their headquarters offshore, or are considering doing so, to reincorporate in the United States.

New Britain, Conn.-based Stanley Works, a major tool maker, reiterated Thursday that the idea of moving its headquarters was fueled by competitive concerns: The company said key foreign rivals “are advantaged by significantly lower income tax rates.”

“Our ability to compete is being undermined by the U.S. tax code, which is archaic in today’s global market, putting U.S. companies that compete globally in an untenable position,” Stanley Works Chief Executive John Irani said.

But the company said it now believes that Congress “has started down a path to deliver comprehensive tax reform that would eliminate the inequities of U.S. international taxation and thereby accomplish Stanley’s original and continuing goal.”

Public and congressional outrage over decisions by Stanley and other firms to incorporate in Bermuda boiled over in June, when Tyco International’s former CEO, L. Dennis Kozlowski, was indicted for sales tax evasion in New York.

Tyco was one of the first companies to make the move to Bermuda in the late-1990s, in an effort to cut its U.S. tax bill.

Stanley and other firms were denounced in congressional hearings. Their patriotism was called into question: Critics said they were deserting America at a time when the country needed greater tax revenue to fight the war on terrorism.

Some state officials also began campaigns against the companies. Last month California Treasurer Phil Angelides called on the state’s two largest pension funds to stop investing in companies that move their headquarters offshore to avoid paying taxes, and said the state would blacklist those firms.

In a statement Thursday, Stanley Works noted that two of its key domestic competitors, Ingersoll-Rand Co. and Cooper Industries, already have reincorporated in Bermuda.

Stanley Works said it’s now up to Congress to change the tax code to improve U.S. companies’ competitive positions. “Ignoring this problem will not make it go away, but can only accelerate the trend of fewer U.S.-headquartered companies,” the firm said.