Warren Buffett is trying to salvage his liberal credentials in the wake of his latest tax avoidance scheme. The Oracle of Omaha became BFF’s with Obama & Company during the President’s reelection campaign when he expressed support for Obama’s tax-and-spend agenda. In an effort to be among the 1 percenters who supported taxing the 1 percenters, Buffett touted the virtues of forking more money over to the Internal Revenue Service…And then the Burger King/ Tim Hortons deal happened.
In the wake of news about companies using “tax inversion” deals to escape the highest corporate tax rate in the world (ours), Buffett’s company helped the US burger joint do exactly that. Burger King became a part of Canada’s Tim Hortons food chain, and as a result no longer has to pay US taxes on profits made overseas… But according to the super-rich liberal, Warren Buffett, this isn’t about taxes:
Alright. So Buffett blasts his critics by pointing out that no-one seemed to know how much in US taxes Burger King actually paid. And really, that would almost be a fair point… if he hadn’t started his rambling evasion with a blanket statement that indicted almost all “inversion deals” as tax avoidance schemes. Don’t you see, it’s wrong when someone else does it; but when Obama’s Omaha Oracle does it – well – then it’s acceptable.
But let’s be honest: Of course taxes had a role in the negotiations. Buffett rightly pointed out that it would make no sense for Tim Hortons, which has revenues twice as big as Burger King, to pack up and move to America. Well… Duh. And it should probably be noted that a 35 percent corporate tax rate tends to drag down profitability. If I was in charge of managing Tim Hortons' profits I wouldn’t want to move to the “land of the free” either.
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Warren might be completely accurate in saying that taxes were not the driving force behind the move. But they undoubtedly had a role in the negotiations. And his overtly defensive evasion on the issue seems to illustrate that he recognizes his own hypocrisy. If, by some miracle, he paid zero attention to the tax proponent of the merger, then he’s not nearly as bright as his stock portfolio would suggest. After all, corporate taxes are a cost of doing business; and costs tend to be a pretty central focus of any merger or acquisition.
The specifics of the Burger King tax-inversion deal aside, Buffett’s appearance on CNBC illustrates a core concept of Liberalism: Some animals are more equal than others. Buffett manages to rationalize, and even defend, a business practice that runs contrary to his political values; because he has somehow convinced himself that his intentions are more honorable than the motives of everyone else. After all, Warren has done a very good job of structuring his assets in a way that allows him to be relatively shielded against the sticky fingers of federal revenuers.
Of course there is nothing wrong with that. But it’s a little hard to speak with an air moral supremacy when one is engaged in the exact behavior their values demand them to condemn. In the end, the Burger King deal was a smart move. It was motivated by profits. And taxes, as they always do in international M&A activity, played a role in the decision.
Sorry Buffett, but it looks like you’re part of the greedy-capitalist club after all.
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