Let me explain. Or actually, in the case of Burger King’s planned acquisition of Tim Hortons, let my colleague Matt Levine explain, because he is smarter and funnier and a better writer than I am, and has already nicely summed things up:
The purpose of an inversion has never been, and never could be, and never will be, “ooh, Canada has a 15 percent tax rate, and the U.S. has a 35 percent tax rate, so we can save 20 points of taxes on all our income by moving.” Instead the main purpose is always: “If we’re incorporated in the U.S., we’ll pay 35 percent taxes on our income in the U.S. and Canada and Mexico and Ireland and Bermuda and the Cayman Islands, but if we’re incorporated in Canada, we’ll pay 35 percent on our income in the U.S. but 15 percent in Canada and 30 percent in Mexico and 12.5 percent in Ireland and zero percent in Bermuda and zero percent in the Cayman Islands.”
What is he talking about? The U.S., unlike most developed-world governments, insists on taxing the global income of its citizens and corporations that have U.S. headquarters. And because the U.S. has some of the highest tax rates in the world, especially on corporate income, this amounts to demanding that everyone who got their start here owes us taxes, forever, on anything they earn abroad.
This is a great deal for the U.S. government, which gets to collect income tax even though it’s not providing the companies sewers or roads or courts or no-knock raids on their abodes. On the other hand, it’s not a very good deal for said citizens and corporations, especially because our government has made increasingly obnoxious demands on foreign institutions to help them collect that tax. Both private citizens and corporations who have a lot of income abroad are deciding that they’d rather renounce their ties to the U.S. than deal with the expense and hassle of letting it tap into income that they have earned using some other country’s roads and sewers and police protection.
Taxing people on income earned elsewhere is a human rights violation. Someone should complain to the UN.
And no, I’m not exactly kidding. The United States has been able to get away with this kind of intrusiveness because we’re powerful. As Obama makes us less powerful, there’s increased incentive for other countries to band together against this practice
Apparently a few liberals who know even less about how a big business that has franchises works than Obama.
Each franchise owner pays the tax for HIS profits in the USA TO the USA.
Out of the 13,000 Burger King outlets 66% of them are inside the USA.
So, liberals who, in the ones of thousands (less than 10,000) promised to boycott Burger King because of this, are only hurting the 99 percenters who have hourly wages and might have gotten laid off had there been enough liberals to make a dent.
Besides, corporations don’t PAY tax.
They pass along the extra costs of taxes to consumers who then pay extra to cover the tax.
IF inversions became illegal the happy liberals would be paying more per burger than they did yesterday.
And Warren Buffet is in there with a major investment.
And he is Zippy’s hero.
What a mess!
Burger King is owned by a Brazilian private equity firm.
So, Obama, man of the world most of the time, might want to think about that.
But, instead we see this:
The Wall Street Journal editorial page noted earlier this month:
Mr. Obama has conceded [overseas tax inversions] are legal, and as recently as July 16 Mr. Lew told CNBC that “we have looked at the tax code. There are a lot of obscure provisions that we do not believe we have the authority to address this inversion question through administrative action. If we did, we would be doing more.”
But lo, on [Aug. 5] a spokeswoman announced that Treasury “is reviewing a broad range of authorities for possible administrative actions” to limit inversions “as well as approaches that could meaningfully reduce the tax benefits after inversions take place.”
Hello? That sure sounds like rewriting tax law by executive fiat, which violates the Constitution’s separation of powers. The rewrite is all the more legally suspicious since no one at Treasury or the Justice Department seems to have been aware of this power before Mr. Obama began denouncing the “unpatriotic tax loophole.” From where does Mr. Lew derive this power to act like a one-man Ways and Means Committee?
When asked about how Obama decided to act unilaterally we got this:
An Obama admission that he never sought an OLC opinion on the legality of potential executive action before plowing forward.
Hark socialists in the USSA. The trickle could become a dam burst. What’s the old adage? Running out of other people’s money. Isn’t redistribution of wealth grand. Burger King didn’t build that. Tim Horton’s sells over 80% of the over the counter coffee sales in Canada. Coffee sales are climbing and burger sales are declining. With taxes etal- smart move for Burger King!
The Alaska legislature passed a new tax bill that lowered the corporate taxes on energy companies to include oil companies. Last week during the primary, there was a ballot issue to over turn the legislative action even though in the 6 months the taxes had been lowered, the AK economy was highly stimulated and jobs were added at a much higher rate than the past 8 years.
The liberals campaigned to over turn the tax decrease on the premise that it was a give away to big oil and corporations. Liberals do not understand that corporations are just people who are working together to earn a living as a business. Taxing a corporation means the tax is passed on to consumers or the dividend stock holders get is taxed again as well as reduced. Liberals also believe that by reducing a tax and allowing an individual or an individual doing business as a corporation are “getting over” on the rest of the people. Does any one know why liberals have such a high percentage of “low information” voters? Maybe I should phrase that to ask why liberals for the most part lack the ability to reason effectively?
Not happy with the Democrats driving business out of California, the Obamanites want to to do the same for the rest of America. Forcing corporate hubs overseas does not lighten the tax load, it instead makes the high earners at the top of corporate management of these businesses relocate to nations who welcome these wealthy “movers and shakers.” As a result, taxation has to be raised on the middle-class to cover the point spread and loss of the big-spenders. There are a lot of places the top 1% can move to where they will not be targets of jealous entitlement loving Socialists.
Democrats have wholly forgotten the ancient wisdom behind the tale of “The Golden Goose.”