As you read modern news, more and more you’re confronted with the irrational. Things that just make no sense. Yesterday we confronted humanity’s downfall via the weirdo act of dumping liquid life over your skull. Now let’s dance the arts of demanding upon pain of torture that folks do stupid things.
So Burger King (home of the whopper) intends to buy Tim Hortons (home of the benign) for a ton of molten gold. This would create the planet’s third largest fast food giant behind Subway, McDonalds, and your local zoo’s cafeteria.
As is now common in massive mergers, the bigger company (Burger King) plans to move its combined headquarters to Canada where corporate taxes are lower. This tactic is called a number of things, but “tax inversion” seems the most common term. In other news, Burger King also announced they’d be passing their future corporate tax cost savings onto the average consumer by lowering their prices [insert appropriate laugh track].
The concept is simple. America’s corporate tax is 35%, depending on where you are in Canada, it could be almost 10% lower. So naturally Burger King wants to exist where they pay less tax. And so naturally the applicable politicians are demanding that the CEO of Burger King be strapped to a chair and fed burgers until he expires.
Fleeing your home country to pay less tax is either greedy (Democrats) or unpatriotic (Republicans). Or maybe your opinion of tax inversion depends on what you personally think of Obama or Boehner or Hollywood or falconry. Or maybe your opinion of tax inversion depends on how many episodes of Ellen you watch every week.
Now the federal government has decided that tax inversion must stop. So they’re looking at steps to end it while simultaneously demonizing the companies that engage in it. Some corporations are clearly beginning to feel the heat.
Walgreens just announced that their merger with Boots won’t involve them leaving the country for Switzerland. Probably because leaving the country for Switzerland for tax purposes is just about the worst public relations move you can make.
It’d be like broadcasting to the planet that you want to funnel your tax funds from the taxpayer and directly into some Iranian cleric’s stripper account. For a small fee, of course.
But what’s this really about? Well, like most things nowadays, you can’t talk about this issue without being labeled a Saint or Satan. So we’ll start with facts.
– The corporate tax rate for Burger King at its Florida headquarters is 35%
– The corporate tax rate for Tim Hortons at its Ontario headquarters is 26.5%
– Both Burger King and Tim Hortons are public companies
– As public companies they have an obligation to make money for their shareholders
– Both Burger King and Tim Hortons had their stocks skyrocket yesterday upon news of the deal
– People like money
– Folks will follow the path of least resistance to acquire money
– If you try and fight the prior two bullets, expect to encounter problems
But wait, what’s this really about? Well, like most things nowadays, you can’t talk about this issue without being labeled a Saint or Satan. So we’ll also include a story:
– Like this blog’s degenerate author, you may have spent a significant portion of your childhood getting subjected to mental and physical torture by bigger or wiser kids
– You have one dollar provided to you each day
– You are a part of the hyper-nerd click
– As part of the hyper-nerd click, the bullies charge you a tax rate of 35¢ before lunch
– The boys in the uber-nerd click are charged a bully tax rate of 25¢
– You’re thinking of joining the uber-nerd click so you can keep that extra dime
– But if you do that, the hyper-nerd click will consider you greedy or a turncoat
– What do you do?
If you said you’d stay with the hyper-nerd click and pay the extra dime you’re a liar or a fool.
Oh, the hyper-nerd folks are pissed off at you? Who cares. They’re not your real friends. Why? Because if they were your real friends they’d help you gang up on the bullies to the point that your lunch tax rate was reduced to 25¢.
If they were your friends, they’d help you work the problem. They would not do nothing. And they certainly wouldn’t call you a traitor or a money hound for leaving them.
Think tax inversion is a coincidence? That corporations are just rotten? Things generally don’t just happen. Canada’s corporate tax rate was reduced 13% by Harper’s administration since it took office in 2006. This merger is exactly why they did it. To steal business and tax dollars from America.
What’s that, you think business can be tamed? That you can construct laws and enforcement mechanisms to the point that a company will willingly pay a higher tax because you made it so? Yeah, good luck with that.
Politicians have tried that since Rome. It never works. Why? See our example above. You can’t fight human nature. Folks will follow the path of least resistance to acquire money. It’s in our blood. Sorry.
America’s politicians can whine all they want. They can shout to the heavens in a cynical attempt to grab your vote in November. But the reality is that they are to blame for this. America doesn’t have a tax inversion problem. America has a leadership problem.
America’s corporate tax rate, structure, and implementation are a mess and have been for decades. This is not news to anybody with a brain in Washington. What have they done to fix it? Nothing. And now they want to demand, yes demand, that Burger King do something against its own self-interest to compensate for their failed political leadership? Apologies, I don’t buy it.
If you personally think Burger King is evil for doing this? Fine, I understand, no worries. Go protest outside your local franchise or eat only at McDonalds. That’s your right.
But don’t buy into the trash that’s spoon fed to you buy the morons who want your vote in two months. It’s their fault.
It’s not effective leadership to demand folks do stupid things just because you’re stupid. Instead, Washington should either do its job or close its mouth. But I suspect it will continue to do neither.
Good morning, one safe, benign Canadian cup of coffee please. Milk and sugar, oh, no thanks, that’s too fierce for me, eh.