There are times you hear things over and over and over and over again, and you just can’t take it anymore. This is one of those times.
Last week Burger King announced that it was buying Tim Horton’s. Immediately the pundit class went into crazy mode. “Oh my god Burger King is buying Tim Horton’s to avoid paying US taxes!”. INVERSION, INVERSION, INVERSION…..
Let’s try and bring some sanity to this. First of all, when a company buys another company for the reason of inversion the big company, looking to avoid paying taxes, looks to pick up a smaller company in a tax haven. While the top line corporate tax rate in Canada might be a little lower than it is in the US, it is not Bermuda. Second Tim Horton’s is not some small little company. Third, the few percent saved on taxes is quickly diminished by the falling Canadian dollar compared the US dollar. Maybe there were other reasons for this purchase……
This deal has more to do with Taco Bell’s waffle taco than it has to do with inversion. McDonalds’s has McCafe, Subway has their egg sandwiches with Seattle’s Best coffee, and now Burger King has Tim Horton’s. However, it is more fun for people to go on TV and yell. This debate is more fun because both political sides are on the same side for different reasons. You have the liberals on the left who like to scream that every corporation is evil, and you have the conservatives on the right who like to yell that taxes are evil.
Just remember this, the corporations who scream about the high corporate taxes are the same corporations who are literally buying the politicians. There is a reason that the tax code has not been changed. They like the high rate with all the loop holes. At the same time they can yell about this fake high tax rate, while taking advantage of all the loop holes their well funded Congresspersons’ have given them. Look up the effective tax rates of the largest corporation in the US, and then you will realize how stupid the taxes are high argument is.