Burger King is yet another major corporation that has bought a one-way ticket to less taxes and more profit. Why? Well, because the United States is expensive to do business in.
The Fortune 100 company is merging with Canada-based donut shop Tim Hortons, and will move its headquarters up north with their new partner--who has a much lower tax bill.
The United States has the highest corporate income tax rate in the world at a whopping 40 percent. Canada, on the other hand, is around 26.3 percent. When you are running a soon-to-be $23 billion company, that 13.7 percent isn't exactly an item on the dollar menu.
Large American companies such as Pfizer, Walgreens, and AbbVie are all seeking out lower taxes in foreign countries in what is called "corporate inversions." Even though the companies claim the potential moves are to advance their growth strategy, it is really because taking over a foreign company and moving to their headquarters betters the bottom line.
Stephen Moore, chief economist at The Heritage Foundation, said:
Expect a blizzard more of these tax moves if the U.S. corporate tax isn’t reduced quickly to at most the average in the industrialized world of 25 percent. Better yet would be to abolish the corporate tax altogether and tax the shareholders on these profits. This would cause a flood of companies to come to the U.S. rather than leave.
Since 2003, Burger King is the 48th company to leave the United States. When asked what the government is doing to stop corporate inversions, President Obama said the Treasury Department is working "as quickly as possible" to slow the bleeding. He also said, "We don't want to see this trend grow." Unfortunately, avoiding devastating loss after devastating loss to the American business community isn't on the liberal agenda--as that would mean lowering taxes for the job creating, investing class...and that would be a travesty.