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.
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.
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.