Burger King is a well-managed global enterprise with stores in more than 100 countries, and half its profits earned abroad. Burger King’s sales are declining, as people turn away from hamburgers, and so it is seeking other avenues to expand.
Simply, the U.S. federal corporate tax rate is 35 percent and applies to both Burger King's domestic and overseas profits, whereas Canada's rate is 15 percent and only applies to domestic sales.
In the second quarter of this year, Burger King's federal and state income taxes were 24 percent of its operating costs and 34 percent of its profits. Locating in Canada would cut those figures by up to 25 percent. No responsible CEO or corporate board could reasonably ignore those figures, and that's why approximately 60 U.S. companies have completed or plan so-called "tax inversions" — acquisitions or mergers with foreign companies that permit them to locate their tax address in a friendlier jurisdiction.
What American businesses actually pay in federal and state income taxes varies a lot, thanks to many exemptions, deductions and provisions to delay taxes on foreign earnings. However, the average combined U.S. and foreign tax burden on profits is approximately 30 percent, whereas the average for foreign rivals is approximately 23 percent.
Treasury Secretary Lew is threatening to bypass Congress and make tax inversions illegal by "reinterpreting" tax laws — likely as suits the convenience of Obama's political agenda. Never mind that tax law is to originate in the House of Representatives, passed by both houses of congress, and then signed by the executive.
Democrats and Republicans alike say they want corporate tax reform — eliminate loopholes and deductions and lower rates — but Obama has made clear he wants more revenue overall out of the exercise. Obama wants more revenue so he can enslave more people. The Regime is not shy about operating outside the Constitution. This is exactly what Lew is proposing.
A revamp of the tax code that simplified and made our rates more competitive would solve this problem overnight. The Marxists do not understand this concept and will continue to denigrate the businesses because their allegiance is to their shareholder (as it should be) and not to the collective (as the Marxists believe it should be).