Tuesday, August 26, 2014

Burger King Moving To Canada

Burger King has announced that it is buying Tim Horton, a large donut chain in Canada for about $11 Billion and moving its corporate headquarters there presumably to avoid US Corporate Income Taxes on foreign income.   And, why not.  US companies have been moving to lower tax countries for years.  Canada lowered its corporate tax rate to 15%.  The US now has the highest corporate income tax rate in the world at 35%.   This move will save Burger King, a global company anyway, $3 Billion over the next ten years in US corporate income taxes if our laws are not changed.  This is $3 Billion Burger King can invest in expansion and or in paying dividends to its shareholders, rather than paying higher taxes to support bigger and bigger government in the US.  And, it is perfectly legal. 

What is particularly interesting about this deal is that Berkshire Hathaway, headed by Warren Buffet, is assisting Burger King with this deal with a $3 Billion investment.  Buffet is the character constantly saying that the rich in America do not pay high enough taxes, when he and his companies have done everything conceivable, under the law, to avoid US income taxes.   Though Buffet has presumably done nothing wrong or illegal, Warren Buffet is a hypocrite of the highest order who uses the tax code to avoid income taxes. 

In any case, American companies buying firms overseas and then moving their headquarters to avoid US corporate income taxes has been happening for years.   It is called Inversion.  Of course, Socialist in government want to pass legislation to stop it, which makes no sense.   In addition, foreign companies have been buying American companies achieving the same goal by moving their headquarters overseas.  In fact, five or more years ago the 700 largest companies in the world were headquartered in the US.  Today that number is about 550 and falling. 

What these Obamanista Socialists just do not understand is that global companies in particular and people can and will vote with their feet to avoid high taxes and regulations.   Some Americans are even renouncing their US citizenship to move to lower tax countries.  It has been happening for more than 35 years as part of a global business migration process.  We don't need new laws trying to stop it.   We need comprehensive tax reform that includes lowering personal and corporate income tax rates and less regulations to keep more jobs and companies in the United States.  Well dah!  If the Socialist job killers would just get out of the way,  we could see real economic growth in the United States once again. 

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