Last Updated on February 19, 2022
As anticipated, the “boycott” bunch came out in full force over the news of a possible Burger King tax inversion.
I’ve already seen comments from people across social media claiming they’ll never eat at Burger King again because the company is behaving in an “Unamerican” way to even consider a way to pay fewer corporate tax dollars.
I won’t be joining any such boycott, so don’t even ask.
Common sense should make it clear to everyone that Burger King isn’t the problem here.
What is a tax inversion?
When a company’s headquarters and business are both located in the United States, those businesses face a roughly 35% corporate tax rate. Granted, many of those companies don’t actually pay that much, anyway, thanks to loopholes and deductions. But that’s the rate — at least on paper — they face.
When a company merges with a foreign company, and at least 20% of the company becomes foreign-owned, that company has the right to move its corporate headquarters to that country, which may be attractive because of another country’s lower corporate tax rates.
In Canada, for example, the corporate tax rate is roughly 26.5%, though some sources have suggested figures as low as 15%, which means a company able to relocate its headquarters there could stand to save millions in corporate taxes, depending on its revenue.
Ireland bills among the lowest rates, at 12%. That’s why several companies, including Chiquita and Medtronic, among others, have targeted Ireland in an attempt to save on taxes.
The Burger King Dilemma
The Tim Horton’s deal could cost Burger King $11.4 bilion. But along with that purchase price comes the opportunity to headquarter the new combined outfit in Canada to take advantage of lower corporate tax rates. But there’s more than that at stake: while Burger King will continue to pay taxes on profits earned in the United States, as it always has, America’s Internal Revenue Service won’t be able to get its hands on Burger King revenue earned from other foreign locations, a big problem corporations have complained about for years.
The upside is economic. Burger King’s stock prices are already rumored to have jumped 20% at the possibility of such a move.
The downside is public reaction, from the aforementioned “boycott bunch” who seem to have so much time on their hand that all they do is sit around and figure out which companies to declare war on next. To them, Burger King seems suddenly anti-American because it’s “dodging taxes.”
I’d listen to that point of view if those people would be willing to provide me with copies of their last seven years’ worth of tax returns showing that they didn’t take a single deduction or did anything that in any way reduced the taxes they paid.
I take the standard deduction every year. I know of no one who doesn’t take whatever legal deductions are available to them. Isn’t that, by the same standard, “dodging taxes”? With the economy still trying to recover from 2008, shouldn’t we patriotic Americans be paying every tax dollar we can, even those the government is willing to just write off because it’s so nice?
Yeah, I can hear the crickets on that one.
Don’t blame the Whopper.
Spare me your boycott requests. Burger King doesn’t deserve a boycott. Frankly, Burger King isn’t the problem here.
Place the blame for this little situation where it properly belongs: on our lawmakers, who’ve created a tax code that allows this kind of foolishness to happen.
Burger King didn’t invent this problem, the door was standing wide open for them because of our tax laws. All Burger King did is decide to walk right through the open door.
If you want to boycott someone over this “shameful” practice, boycott the politicians that continue to allow this sort of thing. Boycott them by voting for their opponents in the next election.
Maybe that’ll send a message.
It’ll certainly be more effective than moving your dinner dollars to another fast food restaurant.
