What used to be America’s Burger King will now be a Canadian based company according to details of the recently announced merger with Canada’s Tim Hortons, the largest fast food chain in Canada.
While the merger of the two firms will create the third largest fast food corporation in the world and a greater competitive advantage for both in the marketplace, Burger King’s decision to move its corporate headquarters to Canada is what is called an “inversion.”
This is where a corporation moves offshore in order to reap huge tax savings. The United State corporate tax rate is 35%, while Canada’s is a mere 15%. Lower U.S. corporate tax rates to 15% you say?
Note that most corporations based in the United States already using numerous loopholes in the corporate tax code here on average pay more like 5%. Some, like General Electric pay nothing at all, while reaping actual subsidies provided generously by the American people at large.
What Burger King, and Walgreens are seeking here is not having to hire so many corporate lawyers and legal teams costing at least a billion dollars, sometimes more, just to research and find ways to lower their tax liability. Canada’s lower tax rate permits corporate entities based in the United States to move not only to Canada, but to other foreign locations where taxes are much lower.
Struggles for Justice will allow Republican conservatives to have their gleeful “I told you so” moment in arguing for commensurate lowering of the U.S. corporate tax rate.
But not so fast. When corporate tax rates are lowered or corporations move offshore, the net loss in tax revenue to the U.S. treasury has to be made up somewhere. And our readers no matter what their politics just felt a shot to their gut, and something removing their wallets and making a further revision in their disposable incomes.
Corporations depend on the necessary infrastructure to better market, and in doing so, get their customers to U.S. outlets of their firms as consumers. Can’t have a drive thru without good roads. Can’t have large clean water needs met without municipal water supplies . Can’t insure the facilities of company offices and consumer or client outlets without excellent police and fire protection. And inverted firms can’t afford to have their own security and first responder services where they sell the goods and services.
Gosh, Elizabeth Warren really knows her stuff. This idea was the basis for much of her successful Massachusetts Senate campaign which vaulted the consumer advocate into the seat vacated by Scott Brown upon his defeat.
Americans of modest means and thick waistlines do have the ultimate power in their hands. They can take their consumer business elsewhere. Earlier this year Walgreens announced it was moving its corporate headquarters offshore, only to meet ample evidence that this business decision would both lose them significant numbers of American customers, and tarnish the company’s image as America’s drugstore. They later announced they were staying right here in the U.S.A.
Today, Burger King announced that it would retain what they called “corporate operations” in the United States. When this sort of obfuscation is present pay close attention to Wall Street; pay very close attention to Wall Street.
By midday those who had bought significantly into both firms to reap profit were confused about that portion of the deal that would line their pockets still further. Behind the scenes investors were reassured that legal corporate headquarters would indeed be in Canada, while consumers here were being trolled to get hooked on the whopper of a lie that the center of corporate gravity would remain in Miami.
Don’t get hooked. See this whopper of a lie for what it is. Ted Kennedy in the last years of his life from the Senate floor made an impassioned speech on healthcare costs that could sum up what Americans of all political views should be thinking in regard to the whole range of corporate tax loopholes, subsidies, and corporate decision making that is inimical to the interests of the American people.
“When will the greed stop,” Kennedy yelled with a clarion call to action. “When will the greed stop?
Struggles for Justice
“Speaking for the Voiceless, Protecting the Vulnerable”
Note: The word whopper here is not used in a proprietary fashion, but in its customary meaning of something leviathan like or well, to most of us, “just really, really big!”