Burger King is close to a deal that would acquire Tim Horton’s (Canada’s huge corporate version of Dunkin’ Donuts). It is more than a corporate expansion however. The move would allow Burger King to justify a “tax inversion” where an American company merges with a foreign company and then reincorporates abroad to fell under a more beneficial corporate tax rate. So long as shareholders of the Canadian companies end up owning at least 20% of the shares of the new parent company, you can escape the high corporate tax rate. I have previously criticized the corporate tax rate — and tax policies in general — as irrational in light of the lower rates in nearby countries. During the last campaign, even Obama admitted that our corporate tax rate is too high but there was never action to reduce it. The White House however recently asked for legislation to stop the inversion maneuver while Senator Sherrod Brown is calling for a boycott of Burger King.
We have previously discussed tax policies on this blog, though I am in the minority in criticizing the rising tax rates in states and cities. I have long been more conservative on tax and spending issues than many here, but I have enjoyed the different viewpoints. Companies and citizens are rational actors. When cities and countries have raised taxes to unacceptably high levels, they have seen an exodus of top taxpayers (which worsen the over tax base). Almost fifty companies have carried out inversion to avoid our high corporate rate and the pace is quickening.
Unfortunately, it remains popular to blame top earners and companies for not paying enough and to seek higher and higher taxes like they are a captive audience. The result of this approach has been disastrous in France. As they previously discussed how top earners are fleeing France in the wake of massive tax increased under Socialist French President Francois Hollande. Hollande’s popularity is now down to the teens (17 percent) and more importantly his economy is on life support. He just dissolved his government as businesses shutdown in the country and his economy contracts. The European Union is demanding reforms from the high spending and high tax approach.
In our country, we have continued to ignore the fact that other Western countries offer a far better deal for corporations. Canada’s corporate rate is 15%. Even when you add the 11.5% rate for Ontario, that is just 26.5% compared to our rate of 35%.
In a comparison of developed countries to what companies pay in the U.S., Canada requires only 53.6% of the U.S. tax burden while the U.K. is only 66.6% and the Netherlands require only 74.5%.
None of this tends to matter when politicians continue to campaign on the notion that corporations are not paying enough taxes and corporate welfare. I agree with some of these criticisms of tax loopholes and I have been a critic of government buyouts and subsidies. However, tax politics continues to rage in the absence of objective discourse. We cannot expect large corporations, particularly publicly held corporations, to remain headquartered in this country when our allies offer substantially lower tax burdens. That does not mean that we should engage in a race to the bottom with the Harper Administration in Canada. We still have many things to offer companies, but the rate of inversions is precisely what many people warned about when our corporate rate outpaced many of our Western partners.
The true impact of these tax policies will be brought home when they start serving mayonnaise with the fries at BK.
Source: Forbes
No person has either a legal or moral duty to maximize his or her tax liability. In the case of a corporation, officers and directors have a duty to utilize all lawful means to reduce taxes for the benefit of shareholders. Therefore, there is nothing improper or unpatriotic about inversion schemes.
Furthermore, the taxation of corporate income is not beneficial to society because all taxes are ultimately passed through to individuals. I would support the elimination of the corporate income tax as part of a general overhaul of the tax code, subject to reasonable restrictions on the hoarding of cash reserves. I would also treat capital gains as ordinary income. This would eliminate all of the gamesmanship and the billions of dollars essentially wasted on corporate tax-planning.
I am much less concerned with corporate tax maneuvers than I am with corporate political power and the nonsensical notion that statutory entities can possess elements of personhood. Eliminating these philosophical and legal absurdities is the toughest challenge.
Buffet is getting 9 percent.
AY;
Buffet is smart enough to get paid a big return for his name being tide to a deal.
Interesting enough Warren Buffet provided the financing…. Hmmm
It’s the NWO, – Modern Miner – how are we supposed to put our infrastructure back together without at least a small amount of income or at least have army? Everyone had enough money before Globalization sooooo I don’t buy the bottom line argument
“Give a man a fish and you feed him for a day;
teach a man to fish and you feed him for a lifetime.”
Give him money and you take his ambition, motivation and incentive.
Compel self-reliance and you give him an inspiring challenge that rewards him.
How long will it take the very wrong liberal/collectivist/progressive/democrats
to learn this fundamental truth.
Oops! They already know and they also know which side their bread is
buttered on. There’s great money in the war on poverty and the race industry.
“Companies and citizens are rational actors.” And the primary responsibility of a corporate CEO is to maximize value for the shareholders (and this is drilled into the heads of MBA students from Day One). It’s NOT a corporation’s responsibility to be patriotic and CEOs who don’t continually meet the ever-increasing expectations of Wall Street are drummed out of the board room.
There are two ways of making a company more profitable, generate more revenue or cut expenses. Avoiding excess taxation legally is an easy way to cut expenses and is a fiduciary responsibility of those running the show. Don’t blame the CEOs who abide by the rules, blame the legislators and IRS rule makers who concocted the messy tax code.
Too many of the liberals here are just cultists. There are many in the world who aren’t. We need more of “the normal” as Veep would say.
David, Conservatives are evil, lazy, greedy and stupid. Might as well finish the meme.
By the way, Steve, not all liberals are poor who envy the money of others. I have a cousin who is an extreme liberal. Her dad was one of the wealthiest millionaires of all my relatives. He had passed away, and she inherited his wealth. She drives a Tesla car that I would love to have but cannot afford. She has solar panels on her house that charges her Tesla car. So her car is basically sun powered. She has a custom license plate on it indicating that it is sun powered. She is your standard liberal who hates corporations, hates the 1% wealthiest, wants a higher minimum wage for everyone, etc., yet she is far wealthier than conservative me with my corporation. Why? As far as I can tell, part of it might be guilt of receiving all that wealth, and part of it is just brainwashing from all the liberal websites that convince her how evil the conservatives are.
http://youtu.be/eCxi5VOYKOY
Seven H.,
None could have said it better. America labors under the dominion of
the Communist Manifesto.
The American Founders conducted themselves with the full expectation that the
Preamble, Constitution and Bill of Rights (context, principle and concluding
reinforcements) would govern this nation.
It’s too bad. It’s just too bad.
.
Steven H, “Sooner or later you run out of other’s peoples money.” The tax and spend folks don’t get it.
Boehner, Camp Profit From Corporate Bid to Avoid U.S. Tax
By Richard Rubin Aug 26, 2014
http://www.bloomberg.com/news/2014-08-26/boehner-camp-profit-from-corporate-bid-to-avoid-u-s-tax.html
Excerpt:
Two top Republican lawmakers profited from a corporate tax-avoidance maneuver that the U.S. Treasury Department is seeking to curb.
While U.S. House Speaker John Boehner and Ways and Means Committee Chairman Dave Camp have resisted calls for a crackdown on companies adopting overseas addresses to pay lower taxes, both have made money off one of the deals. They also have investments at risk of losing value because of government action.
Wow, once again, everyone is “in the weeds” and over-complicating things.
Taxes are The Government’s way of redistributing wealth by taking from those who “make” money (i.e., an individual working a job or a corporation making a profit) and then giving the money to those who “need” money (i.e., government employees, its pet projects, or people who can’t hold a job or form a business.)
Conservatives typically don’t like taxes because they have jobs, own businesses, or ask others to. They are the “haves”.
Leftists typically want higher taxes because they don’t have jobs, have jobs that suck, don’t own businesses, resent those that own businesses, and resent those that “have”.
Conservatives will never convince leftist that taxes are too high because the leftists rely on conservatives to pay for their ideological dreams and their rent, and the conservatives just want to keep what they’ve earned after getting good grades, working hard, and taking risks with their money.
There is no reconciling the debate between those that create wealth (but want to keep it) and those who resent and envy those that create wealth (but want them to share it).
In this debate, the leftists get a “participation trophy”.
Steve H wrote: “There is no reconciling the debate between those that create wealth (but want to keep it) and those who resent and envy those that create wealth (but want them to share it).”
A primary principle is that a man who works should be free to enjoy the fruits of his labor. So what do we do with those who are not able to work, or whose work does not profit them as much? The conservative’s answer is that we voluntarily give to them. It is not that we want to keep our wealth, but rather that we do not want to squander our wealth. For someone to take my wealth by force and then waste it on foolish programs that do not work is disheartening and oppressive. I simply think we should be able to give to those charities that work, and also give directly to those in need.
Last week I was helping a person who receives Social Security and found a receipt from Race Track. The foolish person spent $220 on lottery tickets in one single purchase. That money came from a Social Security check, which means it came from my tax money which I have no power over how it is spent. I have helped many homeless people who blow through their Social Security check every month within 4 days by buying cocaine or meth with it. Yet here I am writing checks every month to the federal government for thousands of dollars. It is my highest bill, higher than my mortgage or any other bill. Liberals scream to high heaven that our taxes are not high enough and that I am greedy by not wanting to vote for our government to take more and more of my hard earned money to squander on programs that do not work.
It seems to me that the debate is able to be reconciled if liberals would just be logical and compassionate enough to hear us out. Instead, they have been trained to hate us and label us as people who do not want to share with others. It simply is not true.
Jimmy Buffet either.
Buffet naked is not a pleasant thought.
Dirty little secret: Buffet told his beneficiaries to put their money in the S&P 500 Index and go lie on the beach.
Buffet has not been an “investor,” he has been an active participant. After buying large, sound positions, he manipulates the environment of the company, including regulatory and market situations. He uses his acumen and influence to further his positions.
Ultimately, as is always the case, the active and “expert” investor does no better than monkeys throwing darts at the financial pages pasted on the wall. At this point, Buffet is a rock-star performing for his fans and enjoying his celebrity. John C. Bogle taught us the financial law of “regression to the mean,” which means no one beats the market (S&P500 Index) over the long term.
Warren Buffet – The emperor has no clothes.
The darling of the liberals, Warren Buffet, is investing $3 billion in financing this deal for BK.
Don’t kill the goose that laid the golden egg.*
Attract capital, don’t repulse it.
Attract corporations, don’t repulse them.
Tax citizens only once and end double jeopardy for taxpayers.
Corporations don’t pay tax, customers/citizens pay taxes for corporations.
User taxes are irrefutable, such as the postage stamp.
Decimate and slash taxes through elimination of regulation, redistribution and privatization.
Start a private charity if you’re a bleeding-heart-liberal.
*It’s an old folktale in which a couple owned a goose that laid an egg every day, and the egg was made of gold. The couple prospered. And the more they had, the more greedy they became. One day, the man said, “Why wait for one little egg every day? There must be a great store of gold inside this goose. If I kill it, I can have it all now.” And so he killed the goose, only to find that there was nothing unusual inside her. And that, of course, was the end of the supply. So in his greed he destroyed the source of his good fortune. To kill the goose that lays the golden egg is to destroy something that provides a steady, long-term gain for the sake of a quick reward.