There is no doubt that a major, if not the sole incentive driving Burger King to Canada is to avoid the highest corporate taxes in the world, but what’s wrong with that? Burger King has 8,500 franchises in the United States. If those franchise fees are paid to a Canadian Company, where the tax rate is 26% instead of 40%, the company will have millions of dollars more to distribute to its US shareholders. This stimulating of the US economy is far more "patriotic" than contributing to the profligacy of the Obama regime.
None of the media raiment renders are suggesting that what Burger King (and others) is doing is illegal. (It’s not, of course.) What they refuse to admit, however, is that it’s good business practice. The function of a corporation is not to channel profits into socialistic government schemes, but to pay out as much as possible to its shareholders.
Many companies, particularly pharmaceutical firms, have come up with a tax dodge that is injurious to the American economy. They "borrow" money from a foreign subsidiary, then take the interest payments off as a writeoff against federal taxes. Of course, the "interest" money never leaves the corporate coffers. It just appears in another account. The problem with this ploy is that once the money has left the country, it can’t be brought back in to pay dividends to US shareholders without the company having to pay taxes on it.
So, what’s the problem here? Why are US conpanies like Burger King moving to other countries or devising elaborate schemes to avoid paying US federal taxes? Is it that US corporations are unpatriotically taking their tax revenues to other countries? Or could it be that US corporate taxes – the highest in the world – are driving US corporations to other countries?
Democrats seem totally incapable of understanding the most basic laws of economics and of human behavior. They refuse to believe, or even entertain, the fundamental truth pointed out by economists from Andrew Mellon to Arthur Laffer – that the higher the taxes, the lower the revenue. This truth has been demonstrated again and again. Every time taxes are raised, revenue goes down; and every time taxes are reduced, revenue goes up.
Like everything else in the universe, there is a reason for this. The reason is human nature. Democrats never seem to realize that they are dealing with sentient, intelligent, and motivated animals – not with fixed statistical precepts. They continue to bring the jack boot of taxation down on a floor covered with ball bearings, never realizing, apparently, that the ball bearings simply move out of the way.
People who are bright enough to have built a business are not as dumb as Democrats. They recognize that taxes are a drag on an economy, and that to pay them is not economic patriotism, it’s economic suicide. And they're smart enough to do something about it.