Who are the biggest villains in the United States today? As much as Americans may rightly fear the rise of ISIS Islamist terrorists, to listen to some commentators, the owners of the Burger King fast-food chain aren’t just the epitome of corporate greed. They’re also being depicted as 21st century Benedict Arnolds for planning to move their corporate headquarters to Canada to evade high U.S. tax bills. But instead of joining in a cost-free demagogue fest that both left and right-wingers can enjoy, rational citizens should be blaming the tax code and a president who could reform the system if he was willing to work with Republicans rather than use them as rhetorical punching bags.
The manner by which Burger King is heading to the great white north is called corporate inversion and is being facilitated by the fast-food franchise purchase of Tim Horton’s, the Canadian donut chain named after an otherwise obscure hockey player. Once they own Horton’s, BK can shift its corporate operations to Canada where they will pay lower taxes than they do now. This is an eminently sensible business decision, but to listen to the likes of MSNBC’s Joe Scarborough, it’s tantamount to treason; the onetime congressman says he won’t eat there any more is encouraging others to do the same. Left-wing lawmakers like Ohio Senator Sherrod Brown agrees and also supports a boycott which would aid both White Castle and Wendy’s that are currently based in his state.
President Obama isn’t calling for a boycott. Instead he issued a call for Congress to pass corporate tax reform that would eliminate the need for American companies to flee the country over their tax bill. But he also said that the need to immediately pass a bill prohibiting such corporate moves shouldn’t have to wait until a solution to the years-long standoff about taxes that helped fuel numerous confrontations between the White House and congressional Republicans is found. Which is to say, he wants companies like Burger King compelled to stay without actually offering them tax relief.
Nobody need hold a benefit for Burger King but the hypocrisy and foolishness that form the foundation for all the demagoguery being aimed at that company seems at least equal to the venality of the fast food franchise.
First, the talk about patriotism and hamburgers is pure baloney. In the global economy trying to tie down a company that does business around the world in this fashion is silly. Americans haven’t owned Burger King since 2010 when SG Capital, a Brazilian private equity firm, purchased it when its previous proprietors dumped it because of its declining value. Expecting these stockholders who purchased a flagging company in the hope of increasing its worth and not to do their part in funding America’s out-of-control government spending is absurd. Global capitalism may not appeal to our sentimentality but it is a reality, and for supposedly smart people who are otherwise happy to profit from it to bash BK in this manner is hypocrisy on an Olympic scale.
Second, the president’s umbrage should be tempered by the fact that the person enabling this transaction is none other than his good buddy Warren Buffett. In 2012, Buffett was a major asset to Obama’s reelection because the billionaire’s support for higher taxes was seen as a definitive answer to conservatives who rightly believed Obama’s budget plans were bad for the economy and economic growth. But though he claimed to be personally in favor of higher taxes for himself, apparently Buffett doesn’t think the same principle applies to companies and it is his Berkshire Hathaway firm that is financing Burger King’s purchase of Horton’s. Hopefully, his secretary, whose higher personal tax rate than her boss (a disingenuous argument if ever there was one) became a staple of Democratic campaign rhetoric, will get a cut of the profits from the deal.
But more important than either of those facets of the story is the fact that if President Obama really wanted to reform our tax code, he could have done so years ago. While joining in the gang tackle of Burger King, Obama lamented Congress’s failure to pass reforms that would have made such moves unnecessary. Yet he torpedoed every opportunity to do so by demanding that a fairer revenue code be tied to tax increases. Rather than make cuts in the entitlements and government boondoggles he wishes to preserve, Obama preferred a continued stalemate because it enabled him to blame this failure on his congressional antagonists. That’s good politics but bad economics.
Liberals have given a lot of praise to Canada in recent years because of its government health-care program, but instead of trying to work toward the creation of a medical system that is a bad fit for Americans, they should have been studying our northern neighbor’s tax codes. Rather than jumping on the bandwagon of those wanting to boycott Burger King, the president and his supporters should stop the demagoguery and begin negotiating in good faith with Republicans in order to create a tax system that doesn’t punish success or reward failure. Kicking Burger King is easy. Protecting both citizens and corporations from the greed of the government and its permanent bureaucracy is hard.