Democrats, Burger King, Illegal Immigration and Hypocrisy

burger kingYesterday, Burger King agreed to buy the Canadian restaurant chain Tim Hortons for about $11.4 billion, creating one of the largest fast-food corporations in the world.  As part of the deal, Burger King will move its home up north to Canada where corporate taxes are significantly lower than the United States.  Under current U.S. law, a company merging with a foreign company can move its headquarters abroad and take advantage of lower taxes, as long as at least twenty percent of its shares are held by the foreign company’s shareholders once the merger is complete.  Management and operations of the merging company are still allowed to remain in the U.S. after the merger.

The news has angered some Democrats, who complain that corporate inversions should not be allowed.  Rep. Sander Levin (D-MI) has proposed that Congress pass inversion legislation to prevent corporations from moving abroad.  He said, “The reported deal with Burger King, an American company, highlights the need for Congress to act with urgency to keep companies in the U.S. rather than moving abroad.  We need to seriously examine the reasons behind this reported deal and take steps in the immediate future to prevent further erosion of the U.S. tax base.”

Burger King is hardly the first American company to flee the high corporate tax rate here in the United States.  According to data from the Democrats on the Ways and Means Committee there have been 47 corporate inversions in the last decade.

Ways and Means Democrats – “Barely a week seems to pass without news that another corporation plans to move its address overseas simply to avoid paying its fair share of U.S. taxes,” said Ranking Member Levin.  “These corporate inversions are costing the U.S. billions of dollars and undermining vital domestic interests. We can and should address this problem immediately through legislation to tighten rules to limit the ability of corporations to simply change their address and ship U.S. tax dollars overseas.”

It should come as no surprise that companies seek to relocate their headquarters to a country that won’t strangle them with corporate taxes.  The combined U.S. corporate tax rate – national, state and city taxes – is nearly forty percent, which is the highest among the 34 member nations in the Organization for Economic Cooperation and development (OECD).  Canada’s combined corporate tax rate is just over twenty-six percent.

And no surprise, the Treasury Department is examining whether it has the authority to bypass Congress and take action to stop corporate inversions.  Earlier this month the Department released a statement that said, “Treasury is reviewing a broad range of authorities for possible administrative actions that could limit the ability of companies to engage in inversions.”  The statement also said the Department is considering “approaches that could meaningfully reduce the tax benefits after inversions take place, to at least provide a partial fix.”

Treasury Secretary Jacob Lew told the New York Times that, “If we have to wait for what is the likely period of time before business tax reform can be enacted I think we’re all going to regret the number of inversions that have occurred in the interim.”

One Democrat Senator has a different perspective and seemed to sympathize with companies seeking lower tax rates.

The Blaze – “To help business grow in America, taxpayers have funded public infrastructure, workforce training, and incentives to encourage R&D and capital investment,” Senator Sherrod Brown (D-OH) said.  “Runaway corporations benefited from those policies but want U.S. companies to pay their share of the tab.”

But at the same time, Brown seemed sympathetic to Burger King, as he said the way to stop companies from leaving is to reduce the corporate tax rate.

“Lowering the statutory corporate tax rate would put companies on a level playing field with foreign competitors and reduce the incentive for them to shift jobs and profits overseas,” he said.

Brown introduced legislation a year ago that would reduce U.S. corporate taxes to help reduce the incentive for companies to leave.  That bill was supported by then-Senate Finance Committee Chairman Max Baucus (D-MT), who said the U.S. tax code has not kept up with the times.

“As a result, they stifle U.S. business and contribute to slow job growth,” said Baucus, who is now U.S. ambassador to China.

But now Senator Brown has apparently changed his tune, releasing a statement calling on consumers to boycott Burger King.

“Burger King’s decision to abandon the United States means consumers should turn to Wendy’s Old Fashioned Hamburgers or White Castle sliders. Burger King has always said ‘Have it Your Way’; well my way is to support two Ohio companies that haven’t abandoned their country or customers,” Brown said.

The merger has been slammed by some in the media, CBS for example, and by other politicians in both the United States as well as Canada.  Reuters has reported that investors cheered the deal.

hypocrisyBut whatever your opinion of the merger or other inversions, there seems to be a bit of hypocrisy on the part of the Democrats and those in the media who disparage the deal.  They complain about the Burger King corporate office leaving the United States for financial reasons, legally I might add, but at the same time these very same people tell us that the illegal immigrants come to the United States for ‘opportunity’ and better economic conditions.  Some even advocate open borders and allowing all those who want to come here to do so.  Rep. John Lewis (D-GA) even tweeted to illegals earlier this year saying “our doors are open.”

Apparently, our doors are open, but once you’re in, you’re not allowed to leave.

Clearly, the Democrats are showing their true thinking by complaining about the Burger King/Tim Hortons merger.  They advocate for illegal immigrants, which we all know is just a ploy to get more Democrat voters, but decry a company leaving the United States for one of the very reasons the Democrats say the illegals leave their own countries – financial gain.

The hypocrisy of the Democrats and the media aside, the corporate tax rate in the United States is strangling economic growth. Until something is done about it the number of corporate inversions will increase.  But Obama’s Treasury Department apparently sees the needed fix to be more regulations aimed at stopping inversions, rather than fixing the repressive corporate tax rate that causes them. No one should be surprised at that.

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2 comments to Democrats, Burger King, Illegal Immigration and Hypocrisy

  • Hmmm, Democrats claim they want to examine the situation and take steps to avoid further erosion of the American tax base. Their idea of “taking steps”, however, means they want to make it illegal for American companies to move to other countries. There is no real discussion of lowering the corporate tax rate or taking other steps that would provide incentives for these companies to stay in America. Why am I not at all surprised at that?