The financial page: Tax Cheat, Inc.(The Talk of the Town)(offshore corporate taxation)

Mark Vicini was a local boy made good. In the early nineteennineties, this Monmouth County, New Jersey, entrepreneur built a computer company, Micro Rental & Sales, into a thriving business. He became a millionaire. He put a disabled relative through college. He gave to charities. But he did not give to the Internal Revenue Service. As Micro Rental boomed, Vicini funnelled a good portion of his profits into an account at an offshore bank in the Cayman Islands -- nine million dollars between 1991 and 1994, six million of which he hid from the I.R.S.

Unfortunately, of all the shady banks in all the Caymans, Vicini had to walk into John Mathewson's. In 1996, Mathewson, the chairman of Guardian Bank & Trust, was arrested for money laundering, and, to avoid a prison term, he turned over the records of all his bank's depositors, including Vicini. Within months, Vicini had pleaded guilty to tax evasion and was given a prison sentence, along with a bill for back taxes of three million dollars.

The tropics are full of Vicinis. In the past decade, there has been a boom in innovative ways to outwit the I.R.S.; sophisticated tax-evasion tactics aren't just for career criminals anymore. Fifteen years ago, no one except the odd international man of mystery had credit or debit cards from offshore banks. Today, two million Americans do. Promoters push "layered trusts," "offshore asset-protection trusts," and "constitutional pure trusts." If you spend a few minutes on the Internet trolling for tax scams, you'll come away convinced that everyone is cheating Uncle Sam but you.

The problem with such schemes, for your average taxpayer, is that they're illegal. If you want to avoid taxes with impunity, hide millions in offshore banks, and contentedly snub the tax authorities of your home country, you need to be something more than an ordinary citizen. You need to be a corporation. You need to be, say, Ingersoll-Rand.

Ingersoll-Rand, the venerable machinery manufacturer, has been an American company since its founding, a century ago. It made the jackhammers that made Mt. Rushmore. It has major contracts with the federal government. (It's currently trying to sell the feds new airport screening machines.) Yet, when it comes to paying taxes, Ingersoll-Rand is not an American company. It's Bermudan. Last December, Ingersoll reincorporated itself in Bermuda, where there are no corporate income taxes. The company has no operations on the island -- just a small office, with no employees, that's little more than a mail drop. But this is enough to save the company forty million dollars a year.

Ingersoll-Rand is not alone. Among the many U.S. firms that, since 1994, have decided to reincorporate in Bermuda are the giant conglomerate Tyco, the electrical-parts manufacturer Cooper Industries, and the hardware maker Stanley Works. They're no different, really, from Mark Vicini: they're using paper transactions to shift income abroad in order to ...