Never let Politics get in the way of a good story. As a sleepy summer winds down and Congress gets ready to return from recess let the pontificating begin. Good friend of the Obama regime, Patriot and loyal American Mr. Warren Buffet has turned the Tax Inversion argument on its heels. “it’s not fair”, “they must pay their fair share”, “it’s unpatriotic” , boycott Burger King, boycott Walgreens, Occupy Wall Street, Tax the rich feed the poor until there are no Rich no more and it could go on and on.
To take a step back Tax Inversion has been a hot topic this summer with US corporations merging with smaller non US corporations from countries with more favorable corporate tax structures. Unfortunately that could refer to almost any country as the US has one of the highest corporate tax rates in the industrialized world.
We have heard from progressive politicians and the President of the Unites States as well as Treasury Secretary Jack Lew calling for Legislation to close the inversion loophole. That is exactly what we need to address the issues, more legislation to inhibit business and added complexity to the tax code.
What we are not hearing is a needed call for Tax reform and lower corporate tax rates to make US corporations more competitive both globally and at home. Rather than coercing a business to operate under cumbersome and adverse regulatory and tax environments it is time for the United States to start leveling the playing field and creating incentive for companies to remain and grow within the borders.
We profess to live in a “Free Market Society” as defined by the prices of goods and services set freely between sellers and consumers set force by the laws of Supply and demand and free from government intervention or monopoly. The reality however is our economy is increasingly besieged by an over bearing government bureaucracy.
On the subject of fairness let’s consider the following. A higher tax burden by the government on US corporations is regressive to both the consumer and the employee. A tax increase will ultimately be passed through to the cost of goods produced. In the case of Burger King the increased cost of a Whopper will be more burdensome on the lower income tax payer than the Higher Income tax payer. For the perspective employee the tax burden will weigh both on wages and the overall hiring by said corporation (see the raise the minimum wage proposal by the Obama camp and circle back). Magnify the above affect with regulatory burdens and you get the lethargic growth we have seen as the new norm in the economy.
Burger King merging with Tim Hortons is not about beating the tax code it is about good business and good investment. Ask Mr. Buffett he will tell you; find him at the next Democratic Party Fund Raiser. It’s a good bet the Warren Buffets secretary is not paying more taxes than Burger King
Summer is over the bells are ringing, class is in session, It is time to lower the corporate tax rate and make America Open for Business again. As the prophetic Ayn Rand wrote let’s not see the producers stop producing or move to Canada in this case.
onepercentorbust 