Burger King Ethics: What’s Unethical About Burger King’s “Tax Inversion” (And It’s Not Burger King)

 According to the company, Burger King was started in 1954 by James W. McLamore and Edgerton in Miami.         Other sources,however, trace Burger King back to  insta- Burger King,a venture founded in Jacksonville,
  Florida,by Keith Kramer and Matthew Burns in 1953. McLamore and Edgerton sold their first franchises in 
  1959, and Burger king soon became a national chain.                                                                                                                                                                                  
                   




  As you may have heard by now, Burger King is preparing to merge with the large Canadian equivilent of Dunkin Donuts, Tim Horton and move the company’s headquarters to Canada. As with the proposed Walgreen move to Europe that was considered and ultimately rejected, the Burger King merger was made for tax reasons, and good ones. The good ones should be clearly explained to the American public, especially voters and those with unemployed workers in their families, but they are not. Let’s  call this Bk Ethics Foul #1: because the public doesn’t understand what “tax inversion” means, they are vulnerable to having it distorted and demagogued for them by unethical politicians and pundits, and so it has been. Let us designate this Bk Ethics foul #2: anti corporate disinformation campaign. 

The United States tax rate is  a whopping 35%, more than any other large industrial nation, even more than those that tend toward socialism. There’s nothing unethical about this, necessarily, though it can be argued that it is a foolish and self-destructive policy. Did you know, however—and I wouldn’t blame you if you didn’t, because not being an international corporation myself, I didn’t know until this issue arose—that the U.S. applies that tax to all global earnings of U.S. companies. This means that the earning of U.S. companies doing business abroad are not only taxed where they earn the profits, but also in the U.S., or as this is technically called, twice.  I should have made it clear that the the US does give a foreign tax credit for the money paid in taxes abroad, so the effect is not completely double tax, just two taxes.) That is definitely unfair (and also bad policy), and will be called BK Ethics Foul #3: predatory taxation.




                                   


Think about what this policy means. A company domiciled here, doing 10% of its business in the U.S. and 90% overseas, still pays that  tax rate of 35% on the 90% of overseas business. It also pays foreign taxes on the 90%, because other government don’t care that the U.S. is intentionally handicapping the competitiveness of its own businesses, and is happy to help out. Companies domiciled in those countries, however, pay  those nation’s corporate tax rates for the operations in those countries, and whatever the tax rate is that applies in any other country they do business in. Here’s an analogy: If you live in Virginia and work for the U.S. Government in Washington, D.C., you pay Washington, D.C. taxes. If Virginia had a law that said that you had to also pay taxes to Virginia at a higher rate for everything you earned in D.C., might you be tempted to move to a state that didn’t double tax you? Would that be unethical?