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
Annie;
I still adore you!
And there’s no such thing as fair in life
Or on blogs….
Hmmm, I wonder why when one of my comments gets deleted its ‘announced’ by JT, but I see a comment by someone her a few moments ago was just deleted here, no announcement. Not quite fair.
I’M the gladiator living n fighting in the real time battle and you guys have your thumbs down on me to make the (soon to be) emporer happy.
Otteray
Please retrieve my rebuttal to nick n paul?
Thanks Otteray! You prove the point that there are intellectuals here who read n pay attention.
———————
Paul n Nick;
There is nithing more on point than the fact that I’ve sued Romney n Gang for Racketeering. That Bain Cap. is a RICO enterprise owned by one who has become so rich n powerful that he lied on his campaign finance form to the entire nation.
Mitt bragged about bevoming filthy rich by thr one n same Bain Cap that is moving the corporate profits out of the country that he gained the ability to acquire by enterprising via federal corruption of his lae firm making one of their own the very US Attirney who declined to investigate the crimes.
If Obama had shut down the public corruption task force and a blog wrote about the successful efforts of inverting your lifetime savings overseas
You guys would be seeking to lynch him.
I’M a victim of this guys organized crimes and undeniable benefiting of blatant n flagrant federal corruption.
No one has the right to tell me to quit my pursuits of justice. Especially American citizens I’m risking my life to serve n protect by trying to bring down a RICO boss so powerful; he’s not going to quit until he becomes POTUS.
Acrime boss so untouchable the DOJ wont even arrest hks lawyer when he confesses to intentional Fraud on the Court.
Chucky, I did not say he could not. I’m just trying to help him. I know many shrinks are enablers. Makes them feel sensitive and liked.
Laser,
As we have discussed before, this is an open forum and you can write about anything you please, however you please. As long as you don’t use one of the handful of naughty words, or get too personal.
laser, There are probably thousands who read here. But, here’s my point. If you’re a one trick pony, few will read you. They’ll just skip over you. I’m the guy who says things everyone else is thinking. Always been that way.
There are thousands who read here – NICK
Who don’t comment and DO give a damn that a crook wants to be POTUS.
My mind tells me that apathy & laxity will allow Pitten’s to get what he wants;
and such would be a terrible thing for this country.
Instead of being like all the Bain/Romney can’t do no wrong;
why don’t you take a hard look at the evidence
and help me do what’s right?
Anyone else here tired of the one trick pony, “Bain Capital, Bain Capital, Bain Capital, Bain Capital!” You have a good mind laser, stop obsessing get out of that loop,and get w/ the flow. You have more to contribute.
Paul;
You Google Romney sued for Racketeering, Slapped Racketeering, NY Times Rigging the IPO Game, WSJ (2005) eToys investors claim conflict, Rolling Stone “Greed and Debt”
Colm Connolly’s (retroactive) Resume at DOJ Office of Legal Policy
and “Shake-up roils federal prosecutors”
All stories I’m the source of –
Then admit to the proper conclusion
Before you ask me to step backwards and argue tax issues not apropos!
Laser – none of that has to do with the gasoline tax and its trust fund. Stay on topic my friend.
Paul;
You are bias n obtuse to the real issues. Romney owns Bain Cap. Hes a RICO boss who wants to be POTUS abd swears he had a vision of riding a white hirse in the WH (but he didn’t inhale).
He kied upon his campaign finance form and off shores his profits (which are ill gotten gains).
You banter about an obfuscating tax issue as if it is dipositive an exonerating.
If Obama did the same thing;
Yiu’d all be firming lynch mobs!
laser – you can Google it if you don’t believe me.
Well, right now its a fairly entrenched two party system and I don’t see that ending anytime soon. There was an excellent Simpson’s episode where aliens came to Earth and disguised themselves as Dole and Clinton and when the public discovered, the aliens said, “What can you do about it, its a two party system” and after Kang won the election, Homer said, “Don’t blame me, I voted for Kodos” as Ross Perot stands in the background. The perception, at least currently, is to vote Republican or Democrat no matter their warts, or vote 3rd party making the more objectionable party more likely to acquire power. To achieve this requires nothing short of an elimination of the winner take all system, but that’s Constitutional Convention/Amendment territory, not going to happen. Even the Republicans grow government. As the economist Warren Nutter said, “There’s nothing so rare as a shrinking government”
The progressives will win until it hits the debt wall…..
Free, If we gore the duopoly w/ more parties to choose from then we can loosen the claws of oppression, on taxes and out freedoms. “There is no freedom w/o choice.”
Nick Spinelli wrote: “If we gore the duopoly w/ more parties to choose from then we can loosen the claws of oppression, on taxes and our freedoms.”
Sounds nice, but how? It has been tried so many times, but never successful.
The Tea Party was on track for this, but being grassroots and unorganized, the liberal socialists turned it into a faction of the Republican party. It’s not, but that has become the general perception because of the tax philosophy of the Democratic party.
David, I retrieved your comment at 4:38.
True story: I actually COLLECT (not pay, that’s a different thing, a SUBSET) MORE in taxes through the operation of my business than I make in profit and its not even close.
Yes, I am aware actually I do sell things and am subject to collecting sales tax in NJ of course and choose to have my websites that sell things quote one price and then simply consider that price a ‘tax included’ price within NJ, which I’m allowed to do of course. In NYC they have 2Bros Pizza, the ‘dollar slice’ which was a dollar slice tax included and now they just changed their price to ‘dollar slice’ a dollar + sales tax which brings it to $1.09
What the government has actually become effective at doing, as your fuel tax suggests, is that they’ve actually made the payment of taxes so “pain free” that people don’t even realize they’re paying it. The direct withholding from paychecks is a bit obvious of course, but some of the other taxes are definitely more veiled.
The government has their claws into us and they’re not going to let go.
If we have a market made up of buyers and sellers who are then subjected to a tax, say a tariff on imports, the buyers and sellers will share the imposition of the tax based on their relative elasticity of demand and supply. Sellers will try to get buyers to eat it, pass it along and buyers will do the reverse and try to get sellers to eat the tax. The corporate structure doesn’t really change that which is why corporate taxation is, in and of itself, basically inane. The corporate tax employs an army of accountants, its particularly inefficient and should be eliminated. Notwithstanding, the question here remains ‘inversion’ and the taxation of foreign earnings. If I own a NJ based business which owns a Delaware business and a Florida business, its not going to be long before I figure out that I should simply have the Florida business own the NJ business and Delaware business…..
NYC Pics – sales tax is a tax on the goods sold, but does not have to be added to the total. For convenience, hot dog stands usually have a flat price which includes the sales tax, same with movie theatres. It saves on dealing with change when you have high demand for your product. Taxes on gasoline include all the taxes applicable. It is fun to go see what the flat retail price of gasoline is in your community without all of the extra federal, state and local taxes added on.
But Free NYC Pics – look at it this way. You are a “Job Creator” in your inefficiency.
Paul;
Again you argue incongruous points as if they are facts. Tax money into the general funds is not seperated from whenve it came,
You arguments have no merit;
And assume facts not in evidence.
As pointed out by my comment above;
BK has mich more (bad faith) going on
Than meets the eye!
Laser – since 1957 federal gas tax money has been sent to the US Highway Trust Fund. Since fewer people are driving and in more fuel efficient vehicles, the amount of gallons consumed has gone down, thus the amount of money into the Fund.
Ha Ha;
I’ve heard about junk science and bias, heretofore;
but this is the first time I’ve been placated with
pseudo ethics math.
Inversion is perversion, if ye be nested here in the U.S. of A! Can we have a California Corporation, doing business as a Delaware corporation; and still have our entire brick & mortar’s in CA – but owe nothing to CA?
Really!
Taxes built the roads your trucks carry your goods upon. Taxes provided the primary educating of your labor force. Taxes pay for the legal system that you count upon to protect your patents, trademarks and copyrights.
While it is true tax money passes through to individuals; it is also true that it passes through to the very (inane) Congressman & Senators who designed the tax SCHEMES that create the absurdity for rewarding monies earned here – a cheaper pathway over yonder.
Inversion is perversion!
Laser – gasoline taxes pay for much of the roads. Property tax pays for the schools. Neither has to do with where the corporation is incorporated. Federal tax is helped by the corporate income tax.
MikeA, Can’t you find more time to hang out here. Please. I’ll send you gift baskets.