Posted August 29, 2014 7:00 PM by Comments (4)

Burger King —challenging confiscatory policies of an imperious state…

 

(CUSA) – Even when governments interfere in business, the market remains the driving factor. In this case, it makes little sense for Burger King to give the U.S. government $10 million a year that they don’t have to.

 

Businesses exist to grow and flourish, which is good for everyone. Oppressive regulation and taxation only lead to less work, inferior products, and stagnation. Goodbye USA, helloooo Canada. Our own Dennis Lohouse has the story. —Ed.

 

 

DENNIS E. LOHOUSE-

 

Burger King (NYSE: BKW), a US corporation headquartered in Florida, announced recently that it will purchase Tim Hortons (NYSE: THI), a Canadian purveyor of coffee, donuts, pastries and sandwiches. Having been brought up in Western New York, I am very familiar with this franchise founded by the legendary hockey pro for which the company is named.

 

At first blush it appears that Burger King desires a slice of the coffee market having lagged in the warfare staged by McDonalds, Dunkin’ Donuts, and Starbucks.

 

It has been noted that by some estimates Tim Hortons serves 80% of the morning coffees purchased in Canada. In my own back yard, the shops are ubiquitous and the coffee is good.

 

This would be just another merger were it not for the debate over tax avoidance that arises out of cross border deals. This is what is called an “inversion” deal. When a company in a high tax country merges with a company in a lower tax country, moves its headquarters and therefore lowers its tax rate, financiers term it an inversion.

 

While the companies deny that their deal is tax motivated, there is clearly a positive tax consequence for the new company. The howling from pro-taxation politicians has already begun. Cries of treason and unpatriotic behavior are being thrown around by those who would deny a company or an individual’s right to seek lower taxes.

 

The irony got richer as we learned that Warren Buffet, acclaimed investor and defender of taxing the rich, would be providing $3 billion in financing for the deal. A friend of the current administration, Buffett famously claimed that he should pay the same marginal tax rate as his secretary.

 

Our President has proclaimed that this kind of tax reducing, but legal, behavior is unpatriotic a claim that might evoke some sympathy were the Fed’s not spending the country into oblivion.
This is certainly reminiscent of the French, whose socialist/communist government set a top income tax rate of 75% on the wealthiest of their citizens only to find those same patriots leaving the country for Belgium and other tax friendly countries.

 

The United States has the highest corporate income tax rate in the world. Not only do we tax earnings at 35% but we also tax the dividends (double taxation) paid by the company and the income of the employees and impose all manner of levies, taxes, fees and fines.

 

There comes a point when those who have options will exercise them. The powers that be still have not realized that taxation changes behavior. If you tax a thing, you will get less of it!

 

When an imperious government finds its confiscatory policies challenged, it yells and screams about doing the right thing, when in fact it is government policy that is driving businesses to leave or keep profits overseas.
When will government learn that there are limits to how much they can take, especially when economic players (call them taxpayers) have lower cost options available to them?

 

It would not be a surprise to see the IRS write a new regulation making inversions tax neutral – that is the IRS would follow the income no matter where the company is domiciled – one wonders what the Canadian taxing authorities will do with this one!

 

Print Friendly
Food prices at 3 year high —now add FDA’s new “war on salt…”
Colbert, Fallon and the crony capitalism of the creative class…

4 responses to Burger King —challenging confiscatory policies of an imperious state…

  1. Allen Bryant
    Allen Bryant August 29th, 2014 at 7:40 PM

    When will people understand….. Corporate taxes add to the “unit cost of production”, a cost ( like all other costs) that is passed on to the consumer in higher prices. It’s nothing but a hidden sales tax. Abolish all corporate taxes and just watch the economy take off.

  2. John Benghazi Weiland
    John Benghazi Weiland August 30th, 2014 at 1:58 AM

    I heard that Burger King was moving to Canada because the 0bama regime co-opted the selling whoppers.

  3. Scott Carroll
    Scott Carroll August 30th, 2014 at 7:43 AM

    Fiscal responsibility escapes the ideology of those in DC. I don’t like paying taxes why would I expect others to.
    Instead of revisiting the tax codes the liberals seek to punish.

  4. Steve Hildebran
    Steve Hildebran August 30th, 2014 at 9:47 AM

    Heavy taxation is one of the reasons BK is leaving the USA!!!