70 posts in this topic

Posted

In buying Tim Hortons, a Canadian chain, BK will move its HQ to Canada and save taxes, a tactic known as Inversion.

Many companies are taking this route due to Obama raising the US corporate tax rate to nearly 35%, among the highest in the developed world. Now add state corporate income taxes and you have an average tax load of 39.1%.

Obama calls it unpatriotic. I call it self defense against a tax system so insane you can run afoul of its legalities without criminal intent. Not even the IRS understands the tax code, which is why it often loses disputes in Tax Court.

On the other hand is this opinion piece by the NY Times. They say repeal corporate taxes and replace them with a consumption tax. The theory is that companies don't really pay taxes since they simply pass their taxes on to their customers. In effect, they are surrogate tax collectors (which double as political whipping boys.)

I lean more towards a two-tiered flat corporate rate like Canada's - generally 15% for small businesses and 25% for large with few alterations.

http://mobile.bloomberg.com/news/2014-08-24/burger-king-in-talks-to-acquire-tim-hortons-restaurant-chain.html

Burger King in Talks to Buy Canadian Chain Tim Hortons

Burger King Worldwide Inc. (BKW), the second-largest U.S. burger chain, is in talks to buy Tim Hortons Inc. (THI) and move its headquarters to Canada, becoming the latest American company to seek a relocation to a lower-tax country.

Burger King, which is majority-owned by 3G Capital, would create the worlds third-largest fast-food chain by merging with Canadas bigger seller of coffee and doughnuts, the companies said in a statement. Canadas corporate tax rate is 26.5 percent, compared with 40 percent in the U.S., according to audit, tax and advisory firm KPMGs website.

The deal threatens to renew debate over American companies shifting their headquarters internationally in search of a lower corporate tax bill. The trend drew criticism last month from President Barack Obama. His aides vowed that the administration would take action to curtail the practice.

3G Capital will own the majority of the shares of the new company, with the remainder held by other shareholders of Tim Hortons and Burger King, according to the statement. The two chains will operate as stand-alone brands, the companies said.

The combined business would have about $22 billion in sales and more than 18,000 restaurants in 100 countries, according to the statement. The deal is subject to negotiation, and Burger King and Tim Hortons dont plan to comment further until an agreement is reached or discussions are discontinued.

Inversion Surge

Between mid-June and late-July, when Obama began criticizing deals that cut taxes by relocating outside the U.S., at least five large American companies have announced plans to make such a move -- known as an inversion. That includes AbbVie Inc. and Medtronic Inc.

Since the start of 2012, at least 21 U.S. companies have announced or completed the deals, comprising almost half the total of 51 such transactions in the past three decades.

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Posted

Yes because that idea went over so well with Walgreens. And 35% is misleading anyway considering all the tax loopholes. Abbvie was only paying 26 and cut it to 13 after their inversion. Its not self defense, its screwing the country you're truly operating out of in the name of padding an already profitable bottom line. Given the public reaction to the Walgreens ordeal I don't think people are on their side. Hopefully this blows up in BKs face the same way.

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Posted

God No.  Tims is still at least decently good, if BK takes over... crap... home brewed coffee from now on than...

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Posted

BK use to be fine but the last few years it has nothing but soggy burgers, I hope Timmies doesn't get the same treatment.

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Posted

Tax rate means nothing when very few companies pay the rate.

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Posted

Ice also like to add that the effective tax rate will remain the same and that the taxes to the US government do not change

Burger kung will still pay taxes on its us operations, but will only pay Canadian taxes on it's Canadian profits. If they stayed in america they would be taxed on overseas profits. I'm all for closing tax loopholes but this is a law I don't agree with. Pretty much anywhere else in the world does not tax you on profits made overseas.

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Posted

Ice also like to add that the effective tax rate will remain the same and that the taxes to the US government do not change

Burger kung will still pay taxes on its us operations, but will only pay Canadian taxes on it's Canadian profits. If they stayed in america they would be taxed on overseas profits. I'm all for closing tax loopholes but this is a law I don't agree with. Pretty much anywhere else in the world does not tax you on profits made overseas.

The USA doesn't fully either but a worldwide tax is probably coming to thwart these inversions. Burger King will likely pay very little to no US tax on its US operations by pushing them to Canada.

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Posted

Again, everyone misses the point.

I'll wait for you to get a proper input device, bro.

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Posted

Again, everyone misses the point. I'm posting from my phone and don't want to explain this right now but found an editorial that does.http://www.bloombergview.com/articles/2014-08-25/burger-king-may-move-to-canada-for-the-donuts

No time to read it all but he seems to be assuming that they can't leverage the patent licensing tactic to reduce us income. I don't think he is accurate there. I am sure burger king will be licensing its package design patents and others to offset.

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Posted

Warren Buffett to Invest in Burger King's Planned Deal for Tim Hortons Berkshire Hathaway Expected to Provide About 25% of Financing, Thrusting Billionaire Into U.S. Tax Debate

 

http://online.wsj.com/articles/warren-buffett-to-help-finance-burger-kings-takeover-of-tim-hortons-1409012196

 

Say it is not so....Warren? How unpatriotic... :angry: 

 

Unpatriotic?  Please - the fiduciary responsibility of the members of a corporate boards to safeguard the interests of the stockholders.  The reason for this entire debate is that the United States - holder of the highest corporate tax rate on the planet - does not want to reduce it.

 

I don't blame Burger King (or Warren Buffett) for wanting to reduce their corporate tax bite (legally)  Considering how much of said tax bite is mis-spent (merely through straight waste and fraud alone), I don't begrudge individuals - of any income tax bracket) wanting to reduce their tax bite, either.  If you are so against tax loopholes or deductions, why have any at all?

 

What hypocrisy!

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Posted

Unpatriotic?  Please - the fiduciary responsibility of the members of a corporate boards to safeguard the interests of the stockholders.  The reason for this entire debate is that the United States - holder of the highest corporate tax rate on the planet - does not want to reduce it.

 

I don't blame Burger King (or Warren Buffett) for wanting to reduce their corporate tax bite (legally)  Considering how much of said tax bite is mis-spent (merely through straight waste and fraud alone), I don't begrudge individuals - of any income tax bracket) wanting to reduce their tax bite, either.  If you are so against tax loopholes or deductions, why have any at all?

 

What hypocrisy!

 

Tell that to the President. he started floating this ignorant idea a month or so ago, forget what scandal he was trying to divert attention from but the press as usual have gone all out on this nonsense 

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Posted

Unpatriotic?  Please - the fiduciary responsibility of the members of a corporate boards to safeguard the interests of the stockholders.  The reason for this entire debate is that the United States - holder of the highest corporate tax rate on the planet - does not want to reduce it.

 

I don't blame Burger King (or Warren Buffett) for wanting to reduce their corporate tax bite (legally)  Considering how much of said tax bite is mis-spent (merely through straight waste and fraud alone), I don't begrudge individuals - of any income tax bracket) wanting to reduce their tax bite, either.  If you are so against tax loopholes or deductions, why have any at all?

 

What hypocrisy!

 

So their responsibility to their stockholders is more important than their responsibility to the country they operate out of (not to mention take advantage of)? I think not.

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Posted

Here's the thing, after tax law, etc. corporations pay only around 12.9% tax rate, not the 39.9% on paper.

If your going to compare to other countries, which may not be a fair comparisons, Germany, with a very strong economy, charges 30%. 

 

http://money.cnn.com/2013/07/01/news/economy/corporate-tax-rate/

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Posted

Huh. I keep hearing that our government is driving businesses out of Toronto (and by extension, Ontario) because of high taxes.

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Posted

Here's the thing, after tax law, etc. corporations pay only around 12.9% tax rate, not the 39.9% on paper.

If your going to compare to other countries, which may not be a fair comparisons, Germany, with a very strong economy, charges 30%. 

 

http://money.cnn.com/2013/07/01/news/economy/corporate-tax-rate/

Exactly. Yet again we see more conservative propaganda designed to make you feel sorry for multi-billion dollar corporations that are exploiting workers and engaging in tax avoidance. Consumers should boycott brands that behave unethically. Just look at what happened in the UK when it was revealed that Starbucks was barely paying any tax - consumers started boycotting the brand and the company had to make a 'voluntary' tax contribution. Sadly consumers in America seem to be utterly apathetic when it comes to abusive business practices - more people there seem to be concerned about which businesses allow you to carry firearms than which pay fair wages or taxes.

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Posted

Tim Horton is just competition, buying out the competition is all this is.

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Posted

In other news, chicken fries are back.

 

Wonder if I can get donuts at my local Burger King now.

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Posted

Sad news that burger king now owns Tim Hortons. Really hope they don't mess with it.

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Posted

BK? Yuck! Haven't been there in decades. Literally.

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Posted

So their responsibility to their stockholders is more important than their responsibility to the country they operate out of (not to mention take advantage of)? I think not.

Considering most large companies are multinational, where they operate out of has zip to do with it.

Board members and officers who do not put their fiduciary responsibilities first will soon be ex-board members and officers. Period. There's you motivation.

Obama knows this. He's just deflecting from the scandal of the week and posturing for the congressional election. The Dems need all the help they can get.

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Posted

Board members and officers who do not put their fiduciary responsibilities first will soon be ex-board members and officers. Period. There's you motivation.

Therein lies the conflict. Businesses are so motivated to make profit that they're willing to break the law, as we've seen with scandal after scandal relating to the financial industry - eventually they overstep the mark and get fined but until then it's all considered good. But it's not 'good' - it's immoral behaviour in violation of the spirit of the law, if not the letter. Morality shouldn't go out the window when the opportunity to make more money presents itself. There is no rule

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Posted

So their responsibility to their stockholders is more important than their responsibility to the country they operate out of (not to mention take advantage of)? I think not.

yeah, in their eyes it is. this is why tons of US companies outsource or hold all of their finances outside of the US. Isnt it Apple, or something gigantic, that doesnt pay a cent in taxes? that's why.

 

Also, how much does BK spend per year on taxes in the US? Gonna take quite a while to recoop the $11bil theyre spending on TH, right?

 

God. People love throwing around the word "unpatriotic" these days. Anything that goes against the US Govt is unpatriotic. Look under your chair! Youre unpatriotic! Youre unpatriotic! Everyone's unpatriotic! :rolleyes:

 

Isnt it more unpatriotic to blindly follow an oppressive government regime? Loving your country and loving your all-powerful government are two separate things.

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