A clever business move - Have it your way...

Burger King got tired of the US 39.10% Corporate tax rate (the highest in the world) and figured out how to lower it to 26.3%

From The Washington Post:

Have taxes your way: Why Burger King wants to become a Canadian citizen
Yet another American company is aiming to move its headquarters out of the country.

International fast food behemoth Burger King Worldwide Inc. confirmed Tuesday that it will pay about $11 billion to buy Canadian chain Tim Hortons Inc., which sells coffee, donuts, and other breakfast food fare. The deal would merge America's second-largest burger chain, which is valued at nearly $10 billion, with the Canadian equivalent to Dunkin' Donuts, which is valued at more than $8 billion. It would also move the new company's headquarters to Canada, where corporate taxes are significantly lower.

The newly merged company would become the world's third-biggest "quick service restaurant company," with more than 18,000 restaurants in 100 countries, said Burger King and Hortons in a statement Monday. The deal would create a business capable of rivaling Yum Brands, which owns Taco Bell and Pizza Hut, and is valued at more than $30 billion. But while Yum Brands operates from Louisville, KY, the new Burger King and Tim Hortons parent company would likely station itself in the Ontario province of Canada.

On the surface, the reason for a headquarter shift across the country's northern border is simple: lower corporate taxes.

As we have have noted before, when a company reincorporates abroad, as the practice is known, what it's really doing is shifting its corporate citizenship; and when a company shifts its corporate citizenship, what it's really doing is trying to pay less in taxes. The nominal corporate tax rate in the U.S., which combines national, state, and city-level tax rates, is nearly 40 percent—the highest across all 34 Organization for Economic Cooperation and Development (OECD) member countries. Canada's, by comparison, is just over 26 percent.

Of course, the Democrats are trying to stop this by doing absolutley the wrong thing - passing another law - from the Ways and Means Committee website:

H.R.4679 : Stop Corporate Inversions Act of 2014
On May 20, a group of nearly a dozen House Democrats today introduced legislation to tighten restrictions on corporate tax inversions, limiting the ability of American companies to avoid U.S. taxation by combining with a smaller foreign business and moving their tax domicile overseas. The House legislation – the “Stop Corporate Inversions Act of 2014” (H.R. 4679) – and companion Senate legislation introduced by U.S. Sen. Carl Levin (D-MI) largely mirror the inversion proposal included in the President’s FY 2015 budget.

Co-sponsors of the legislation include Ways and Means Committee Ranking Member Sander Levin (D-MI), Rep. Charles Rangel (D-NY), Rep. Jim McDermott (D-WA), Rep. Richard E. Neal (D-MA), Rep. Lloyd Doggett (D-TX), Rep. John Larson (D-CT), Rep. Danny K. Davis (D-IL), Budget Committee Ranking Member Chris Van Hollen (D-MD), Rep. Rosa DeLauro (D-CT), and Rep. Jan Schakowsky (D-IL).

Gee - all they would have to do is cut back on Federal spending and cut taxes. If we lowered Corporate taxes to 25%, business would flock back to the USA. Overseas manufacturing would flock back to the USA. Profits and jobs would flock back to the USA.

But nooooo - we must smash the free market.

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About this Entry

This page contains a single entry by DaveH published on August 26, 2014 1:06 PM.

Humans need not apply was the previous entry in this blog.

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