Inversion

Canada taxes corporate earnings at a lower rate. As we've all heard repeatedly, Burger King plans to buy Tim Horton, a Canadian coffee-and-donut chain, with the financial assistance of Warren Buffett. They will move the combined headquarters to Canada to save millions in U.S. taxes, an action called an "inversion." See the story in Forbes, which quotes Buffett as follows:

I will not pay a dime more of individual taxes than I owe, and I won’t pay a dime more of corporate taxes than we owe. And that’s very simple.

People who should know better are claiming inversion is unpatriotic, inappropriate, and reason to boycott Burger King. See a story about this nonsense in The Federalist.

A corporate board of directors carries out its fiduciary responsibilities when it takes advantage of any lawful way to seriously reduce the corporate tax burden and return more profit to the stockholder-owners of the firm. Doing less could be grounds for a lawsuit; granted that almost anything can be grounds in our litigious society.

If the President and the Congress believe "inversion" is wrong, they are invited to change the law so such acts are no longer lawful. Such change will not happen soon.

Republicans and Democrats cannot agree on the form a remedy should take. Republicans prefer lowering our corporate tax rate so that "inversions" no longer make financial sense. Democrats prefer requiring the higher U.S. tax rate on all profits earned in the U.S. regardless of where a firm is domiciled. Isn't governmental gridlock wonderful? (I'm still in sarcasm mode.)