As you may have heard by now, Burger King is preparing to merge with the larger Canadian equivilent of Dunkin Donuts, Tim Hortons and move the company’s headquarters to Canada. As with the proposed Walgreens move to Europe that was considered and ultimately rejected, the Burger King merger was made for tax reasons, and good ones. The good ones should be clearly explained to the American public, especially voters and those with unemployed workers in their families, but they are not. Let’s call this BK Ethics Foul #1: news media incompetence. Because the public doesn’t understand what “tax inversion” means, they are vulnerable to having it distorted and demagogued for them by unethical politicians and pundits, and so it has been. Let us designate this BK Ethics Foul #2: the anti-corporate disinformation campaign.
The United States tax rate is a whopping 35%, more than any other large industrial nation, even more than those that tend toward socialism. There’s nothing unethical about this, necessarily, though it can be argued that it is a foolish and self-destructive policy. Did you know, however—and I wouldn’t blame you if you didn’t, because not being an international corporation myself, I didn’t know until this issue arose—that the U.S. applies that tax to all global earnings of U.S. companies. This means that the earning of U.S. companies doing business abroad are not only taxed where they earn the profits, but also in the U.S., or as this is technically called, twice. (UPDATE: I should have made it clear that the the US does give a foreign tax credit for the money paid in taxes abroad, so the effect is not completely double tax, just two taxes.) That is definitely unfair (and also bad policy), and will be called BK Ethics Foul #3: predatory taxation. Continue reading