This week, the Burger King-Tim Hortons merger has been making headlines all over the United States and Canada. The $11.5 billion deal will see the burger chain and the coffee giant form to create a new company that will be headquartered in the Great White North. Essentially, Burger King’s owner, 3G Capital, will save money on taxes, while Tim Hortons will likely have access to the U.S. and global markets.
The deal has been criticized by American and Canadian officials alike. Opponents of the deal argue that the move is part of the corporate tax inversion movement, a trend that sees American companies merge with foreign entities and relocate their headquarters to that country in order to save on taxes.
President Obama called the move “gaming the system,” while Treasury Secretary Jack Lew has been urging the Congress to close the loophole because these firms are taking advantage of the U.S. system while not paying their fair share. This measure of taxing foreign profits has become an obsession for public officials in recent months.
Despite allying himself with the president and urging raising taxes, Warren Buffett was a major component of the deal. His company, Berkshire Hathaway, is financing Burger King’s relocation to Canada with $3 billion, and will see between three and nine percent interest annually on the merger.
Buffett has long been a proponent on reining in businesses and slapping larger taxes on corporations and millionaires. However, this entire move was to avoid paying U.S. taxes, something that Democrats have yet to call Buffett on – the Democrats often seek out Buffett’s advice on domestic economic policies so it’ll be difficult to chastise him.
The billionaire has often invoked strategies that help minimize investors’ tax burdens and has regularly presented the argument that paying more than what is necessary is a stupid move to make.
Yet, it is still rather hypocritical considering that he wants to hike taxes. Think about it, if you constantly rally the Congress to impose tax increases shouldn’t your personal mandate be to align your opinions with your actions? This is akin to Buffett wanting an increase in the minimum wage but not actually paying his minimum wage employees a higher salary.
Indeed, it’s just another case of “do what I say and not as I do.”
Buffett doesn’t care, though. Why should he considering that he has close personal ties to the U.S. government? As previously noted, he has personally benefitted from the Troubled Asset Relief Program (TARP). It’s difficult to expect cronyists to be honest, ethical and principled.
Eugene Patrick Devany says
Business owners need to reimburse the government for the services which enable the business to grow and prosper. A value added tax (VAT) is the fairest way to apportion taxes among different types of businesses and across different taxing jurisdictions, yet the U.S. is the only developed country that does not have a VAT. Because foreign businesses (inverted or otherwise) are a threat to U.S. jobs the payroll taxes need to be replaced. An 8% VAT could replace the 15.3% combined payroll tax revenue and favor U.S. workers and stimulate the U.S. economy.