The Truth About Tax Inversion

Barack Obama calls Burger King a "tax deserter"  because the company plans to relocate its headquarters to Ontario, Canada.  What the President doesn't tell voters is that all income generated by restaurant sales in the United States are taxed at the current American corporate tax rate.  What Burger King saves is tax on world-wide sales outside the U.S. - that income will be taxed at the lower Canadian rate.

There are 4 very important lessons in these facts.  First, most big corporations are international in scope - why should income from foreign sales be taxed at the higher American rate?  In fact, all companies, not just Burger King, have a duty to their shareholders to maximize investor returns through all legal means possible.  If they didn't, they would fail in their duty and the stock value would fall.

Second, the real winner in all this is Canada.  What a windfall - new tax revenue for roads, schools, hospitals etc.  And this didn't just happen by accident.  For 20 years, both Liberal and Conservative governments have diligently lowered corporate AND individual tax rates through good governance - keeping budget deficits relatively low, cutting back on the size and scope of government, and NOT running up an enormous national debt like America's 18 Trillion Dollars.

Third, America desperately needs tax reform.  The current code is so convoluted, complicated and confusing that no one understands it.  Simplify it, take out whatever "loopholes"  you like, but remember that every respectable economic study concludes that lower taxes eventually generate more money for government coffers.  Sounds like a contradiction - lower taxes and get more money - but it really works.  Why?  Simple- companies and entrepreneurs have more money to invest and consumers have more money to spend.  That's called economic growth.

Fourth, socialists like President Obama have got to wake up to the fact that we live in a competitive world.  Instead of all this nonsense talk about "tax deserters",  "the top 1% don't pay their fair share",  "occupy Wall Street"  etc., focus on the real issues.  Hire advisors who understand economics and business, who can expand on the points raised above.  Warren Buffet didn't put $3 Billion into the Burger King / Tim Horton's deal because he wanted to betray your trust, because he converted to naked capitalism or because he changed his social values.  He did it because it's a good business deal with visionary management and a solid, forward-looking business plan.  Finally, Mr. President, check out your union supporters' pension plan.  Bet you $10 you'll find Burger King's and Tim Horton's shares in the portfolio because they are profitable and thereby contribute to the overall value for members.  Good luck.