The Patriot Post® · Have It Your Way — Pay Less Taxes
“Never miss a sweet deal.” That’s what you’ll see on the Burger King website home page, and it turns out the fast food giant is following its own advice. This week, BK announced it will purchase the Canada-based Tim Hortons coffee and donut chain and relocate its headquarters north of the border – where, incidentally, the corporate tax rate is more than 10 percentage points lower than the U.S. rate.
It’s the latest in a string of “inversions,” in which U.S. companies merge with foreign companies and then re-incorporate overseas (or, in this case, to Canada) to take advantage of lower tax rates. Burger King Executive Chairman Alex Behring insisted the move “is not a tax-driven deal” but instead “is fundamentally about growth and creating value through accelerated expansion.”
Of course, growth and accelerated expansion happen best when you’re not forced to send 35% of earnings to the federal government. (Even if the actual burden is less than 35%, reducing that burden is also expensive.) While the U.S. has the highest corporate tax rate in the world, the total business tax cost in Canada is a whopping 46% lower than the U.S., according to a study by KPMG, an audit, tax and advisory services firm. In fact, Canada is one of the most business-friendly nations on the planet. That value combo must sound mighty yummy to the whopper king.
Burger King insists it will still pay taxes in the U.S. on all U.S. earnings, but, with the move and the new Canadian address, profits earned worldwide through any global expansions will generally not be subject to the astronomical U.S. tax rate.
Naturally, those who believe that business earnings are, by default, the government’s (“you didn’t build that,” after all) and that Washington only deigns to let companies actually keep some of what they earn are crying foul. Sen. Sherrod Brown (D-OH) wasted no time calling for a boycott of Burger King, accusing the company of “abandon[ing] the United States.” This goes hand in glove with the Obama administration’s accusation that companies pursuing inversions lack “economic patriotism.”
Amusingly, while the president is suddenly interested in patriotism, the man who is effectively financing Burger King’s move is none other than Obama’s “we need to raise taxes on the rich” pal Warren Buffett. The billionaire financier’s Berkshire Hathaway is giving $3 billion towards the $11.4 billion dollar deal and will earn 9% interest annually. It’s truly astonishing how quickly Buffett managed to go from Obama tax-hike poster boy to downright “unpatriotically” helping Burger King avoid taxes. But that’s leftist hypocrisy for you.
It could be that for all his rhetoric (or, rather, despite it), Buffett recognizes a good deal when he sees one. And sadly, that good deal does not involve staying stateside when Washington pillages profits in the name of economic justice. Instead of targeting companies that create jobs and drive economic growth, the government should be incentivizing them to keep their U.S. addresses by lowering tax and regulatory burdens. That would be a deal that’s truly sweet.