US corporate taxes chase off oil service companies

Houston Chronicle:

The chief executive of Weatherford International said Thursday he and his company headquarters will move from Houston to Switzerland, joining at least two other top Houston oil services executives in seeking closer proximity to emerging oil producing regions overseas.

Halliburton Co. relocated its top executives to a Dubai headquarters in 2007 and offshore driller Transocean has announced plans to move to Geneva.

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In 2009, more than 50 percent of Weatherford's business will be in the Eastern Hemisphere, and it should grow to 60 percent in a few years, Duroc-Danner said. The U.S. will probably be 25 percent or less.

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In addition to putting the company closer to key growth markets, the move will give the firm access to a corporate-friendly Swiss tax structure that will only tax its domestic income, rather than its worldwide income, Duroc-Danner said.

Multinational U.S. oil field services firms have long complained that while much of their income is earned overseas, it is taxed as if it were earned in the U.S. Bermuda is a tax haven, but lacks the same tax treaties the U.S. has with Switzerland, and Congress is considering tightening restrictions on companies headquartered in such countries.

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U.S. oil field services firms also worry that the incoming Democratic administration and more solidly Democratic Congress will raise corporate taxes, and that may have spurred some companies to set up offices abroad, said Neal Dingmann, an industry analyst with Dahlman Rose & Co. in Houston.

Transocean, the world's largest driller, also run from Houston, said in October it would seek to change its incorporation from the Cayman Islands to Switzerland. The move has been approved by shareholders but is awaiting approval by a Cayman Island court. If approved, 14 company officers, including CEO Robert Long, will leave Houston to run the new headquarters in Geneva.

Last year, Halliburton CEO Dave Lesar left Houston to open a dual headquarters in Dubai.

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This is a move that Democrats and the Obama administration are responsible for. They hammered McCain for wanting to lower the corporate tax rate, but did not seem to comprehend how uncompetitive they are making the US. We can expect the typical Democrat demagoguery and challenges to the patriotism of the companies, but such talk does not change the bottom line for these companies. They will be much more profitable oversees.

I think another motivation is the fact that Democrat policies of strangling domestic production means that more of their business is done overseas rather than in this country. If the Democrats would open production in the US, a greater percentage of that business would be done here and there would be more reason to stick around.

Democrat hostility to energy is making us poorer.