Pirate's Cove

The Burger King issue is already fading from memory. Virtually no major media outlets are carrying any stories on it this morning. But, we know that certain hardcore Leftist idiots will still attempt to foment division over it. Some are trying to implement boycotts. Megan McCardle had some important details the other day

Jacob Levy, an American professor living in Montreal, made a point on Twitter yesterday that I wish more journalists would take to heart: If you’re writing about inversions, and you don’t prominently mention global taxation in the first few paragraphs, then your article is not serious and anyone with even a smidgen of actual interest in the issue should stop reading.

Let me explain. Or actually, in the case of Burger King’s planned acquisition of Tim Hortons, let my colleague Matt Levine explain, because he is smarter and funnier and a better writer than I am, and has already nicely summed things up:

The purpose of an inversion has never been, and never could be, and never will be, “ooh, Canada has a 15 percent tax rate, and the U.S. has a 35 percent tax rate, so we can save 20 points of taxes on all our income by moving.” Instead the main purpose is always: “If we’re incorporated in the U.S., we’ll pay 35 percent taxes on our income in the U.S. and Canada and Mexico and Ireland and Bermuda and the Cayman Islands, but if we’re incorporated in Canada, we’ll pay 35 percent on our income in the U.S. but 15 percent in Canada and 30 percent in Mexico and 12.5 percent in Ireland and zero percent in Bermuda and zero percent in the Cayman Islands.”What is he talking about? The U.S., unlike most developed-world governments, insists on taxing the global income of its citizens and corporations that have U.S. headquarters. And because the U.S. has some of the highest tax rates in the world, especially on corporate income, this amounts to demanding that everyone who got their start here owes us taxes, forever, on anything they earn abroad.

Does anyone blame Honda and Toyota for keeping their corporate registration in Japan? They are the two top auto sellers in the USA. Yet, they only pay the 35% tax rate (and state taxes and such) on their operations here in the USA. No one in their right mind wants to pay more than they have to. John Kerry berths his yacht in a different state in order to avoid the high taxes and fees of Massachusetts. Can you blame him? You can certainly go after him regarding his hypocrisy, but, would the rest of us do the same if we could? You bet.

BK will continue to pay their taxes for operations in the USA. What they won’t be doing is paying 35% for their earned revenue in other countries to the US treasury, along with the taxes they pay in those countries. Companies do not exist to feed the federal treasury.

Of course, there are still some whiners who don’t get it, like at Rolling Stone, which refers to it as “the biggest tax scam ever” (despite being completely legal)

Over the next decade, corporate inversions could cost the U.S. Treasury nearly $20 billion – revenues that could other­wise pay for Head Start programs, to rebuild roads and bridges, or just bring down the deficit. The wave of inversions is threatening “to hollow out the U.S. corporate income tax base,” Lew warned in a July letter to the chief tax writers in the House and Senate. But inversions are just the tip of the iceberg. The crisis of corporate tax avoidance is far more pervasive – and destructive – than either Obama or Lew is letting on. At a moment when Congress appears impossibly divided, a strong, bipartisan consensus has, in fact, emerged in Washington: The world’s richest corporations will get away with fleecing hundreds of billions of tax dollars from the rest of us.

This again misses the point that companies do not exist to finance the government, however, this gives us a good look into the mind of a Progressive.

More than $2 trillion in U.S.-based multinational profits currently sit in offshore accounts, representing, by credible estimates, in excess of $500 billion in unpaid taxes. If that money were deposited in federal coffers tomorrow, it would wipe out the deficit for 2014. And every year that Congress dithers on a crackdown, America is forfeiting an approximate $90 billion in revenue.

If that was deposited, the government would simply spend the hell out of it. And, again, it gives a view into the mindset of Progressives: All Money Belongs To The Central Government. Or, truly, they mean that Everyone Else’s Money Belongs To The Central Government. Including if it was earned in a different country.