Posted on 08/26/2014 8:16:31 AM PDT by Squawk 8888
Speaking as someone who has eaten there, Burger King is one of the saddest places on earth. Abandon digestion and pimple-free skin, all ye who enter there. To me, Burger King isn't just a lousy place to eat but a sort of existential black site that drains the life out of you (well, me) on every level: All the products are just lousier versions than what's offered at better fast-food joints. The ads, even those old fake-hip ones with the weird Burger King, are awful to the nth degree (anyone else remember the "Where's Herb?" campaign?).
Yet I find the attacks on Burger King's purchase of Tim Horton's "Cafe & Bake Shop" even more saddening. By picking up the Canadian-owned maker of the terribly-named "Timbits" (donut holes named after the Canadian hockey player and drunk-driving cautionary tale who co-founded the chain), Burger King can escape U.S. corporate taxes that are much higher than those in most other countries. This is the so-called tax inversion process, by which a U.S. company picks up a foreign one and then moves its corporate headquarters there to take advantage of lower taxes. "Voila, higher profits!" clucks The Daily Beast's Daniel Gross. The Department of Treasury estimates that over the next decade such inversions could mean a loss of $20 billion in corporate taxes. To put even that self-evidently puny amount in even clearer context, the Congressional Budget Office (CBO) figures the corporate income taxe will raise $4.5 trillion over the same period. "In other words," notes Kyle Pomereau of the Tax Foundation, "corporate inversions are predicted to cost 0.5 percent of the corporate tax base over ten years."
The White House and a number of Democrats are trying to stymie tax inversions through legislation and the bully pulpit. Just earlier this month, President Obama floated the idea of an administrative action that could spike such deals and he's blasted tax inversions as "unpatriotic."
But this is all b.s. until the U.S. gets its corporate tax rate into line with what other countries are charging. According to KPMG, which has a comprehensive chart of corporate tax rates (including average state and regional rates), the U.S. total comes to 40 percent. Canada's comes to just 26.5 percent:
"The corporate income tax rate is 26.5%. It comprises a 15.0% federal tax component and an 11.5% provincial tax component. Depending on the province, the combined general corporate income tax rate ranges from 25% to 31%. Lower corporate income tax rates are available to Canadian-controlled private corporations (CCPCs) on their first CAD$500,000 (CAN$350,000 to CAD$425,000 for certain provinces) of taxable active business income. A 2014 representative tax rate for a CCPC on its first CAD$500,000 of active business income is 15.5% (an 11% federal tax component and a 4.5% provincial tax component). Depending on the province, the 2014 combined active business income tax rate ranges from 11% to 19%."
Read more, including a breakdown of the U.S. figure, here. There's no shame or infamy in moving to where conditions are better, whether for your family, your job, or your business. Such freedom of mobility is, in fact, typically celebrated as one of the things that makes America exceptional. And it goes without saying that since tax inversions are perfectly legal, there's not even a hint of impropriety here.
As Gross points out in The Daily Beast, Burger King won't save its corporate skin simply by shuffling off to Canada. It's a poorly run company and it's really kind of a miracle it's lasted as long as it has (did I mention how sad-inducing BK is?). But for god's sake, are Democrats and other economic nativists really so dumb as to think they can gain ground in a global economy by making it harder for all businesses to do business in America (whether through higher taxes or ownership rules or other regulations)? That way madness liesand continued economic lassitude.
Canada Ping!
I welcome the competition. America needs the incentive to slash taxes.
The only reason there are corporate income taxes is that the low-information types agree with Ubama, that revenue is not the main purpose of taxation, but rather punishing people you hate.
Liberal answers to “why not move”
“They don’t need more money”
“Because the US needs the tax money”
“They are selfish if they move”
“Corporate greed must be stopped”
“If they move, All Burger Kings should be torn down and made into bird sanctuaries”
Funny. The Dims all complain that the US corporate tax is too low compared to the rest of the world. And yet, they also get to complain when companies move out of the country to pay lower taxes...
Incentives. Conservatives recognize them as the most powerful method of influencing human conduct. Liberals refuse to believe they exist, and denounce those who take advantage of the incentives liberals have erected.
Needs gravy and curds.
I think this is great (the business deal, not the burger)—far from loosing money, Canada will be picking up about 2/3rds of every dollar that the U.S. looses.
Of course, I live on the northern side of the border.
I find Burgerking superior to McDonalds but that is just my opinion.....as to their business they seem to be doing pretty good where I come from. I don’t know why the bashing by this guy...it’s fast food....pretty much what I expect and no one is forced to go there.
I would normally say it’s ok but looking at the supposed BK move to purchase Heinz and the ties in this deal to Mr. “I don’t pay enough taxes and neither do you” Warren Buffett; I would say it is “unpatriotic”. It is unpatriotic for the lying sack-o-crap Obama supporter to say one thing and then do what profits him most. Yeah, I know that lying and cheating is a common trait of all democrats and supporters but I would like to see this publicity shoved up Buffett’s ass.
Didn’t Burger King come out with the gay burger? Rainbow burger whatever?
Exactly. It used to be the other way around; we’d cross the border to take advantage of your lower taxes. Consumption taxes are still higher here, but personal income taxes are comparable and corporate taxes are lower. And we don’t tax our expatriates.
Taxation and regulation are a great incentive to donate money to politicians who promise a few crumbs for business.
I agree with you, they’re not great but they provide an inexpensive, reasonably nourishing lunch. There are better burgers out there but they cost a bit more and the locations are not as convenient.
Anything that takes money out of the progressive, crony-capitalist parasites hands in Washington is something I applaud.
“Freedom has many difficulties, and democracy is not perfect But we have never had to put a wall up to keep our people in, to prevent them from leaving us!” — JFK
Name of the game is profit make every move a good one.
I think that was a one time thing in San Francisco that didn’t fly that high outside San Francisco! Make no mistake if it had proved popular it would have been introduced else where and every other chain would have come out with one!! Profit is the leading goal of any corp. as it should be!!
Interesting that they never tried it here in Toronto, where the whole “Pride” movement started. The truth is that we have more gays here than most cities because we have more people of *all* types here (3rd largest city in North America).
They offer more coupons than the others....my wife and I are retired and the booming Obama economy hasn’t helped us this far so we really count pennies. Burger king seems to be a regular stop when we go out for fastfood!!!
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