It must have been a bitter moment for President Barack Obama when he got the news that his favorite economic guru not only doesn’t like paying taxes but hates America.
Warren Buffett, whose eponymous rule was a staple of Obama’s 2012 reelection campaign, is underwriting Burger King’s proposed move to Canada that the Left is denouncing as practically the most dastardly plot since the Rosenbergs helped the Soviets get the bomb.
Burger King is acquiring the Canadian coffee-and-doughnuts chain Tim Hortons in what is called a “corporate inversion.” At least that’s the technical term for it. Obama and the Left prefer to call it by names usually reserved for spies before they get a blindfold and a last cigarette.
The practice of corporate inversion, or relocating overseas to avoid the burden of U.S. taxes, offends the president’s sense of “economic patriotism,” as he put it in a recent speech. He referred to firms that make this move as “corporate deserters.”
Senator Bernie Sanders, the socialist from Vermont, says companies like Burger King “have absolutely no loyalty to the people of the United States and our government.” Senator Sherrod Brown, a Democrat from Ohio, has called for a boycott.
This outpouring of patriotic fervor is something to behold, especially from the same sort of people who used to think expecting a politician to wear a flag lapel pin was a crudely nationalistic imposition.
The Left almost universally scorns the idea that a closely held family business might have religious motivations — and was outraged by the Supreme Court’s Hobby Lobby decision for this reason — yet believes that enormous globe-bestriding corporations should have patriotic feelings.
In most other contexts, Obama is a proud “citizen of the world.” Except when it comes to taxing businesses. Then, he is transformed into the Giuseppe Garibaldi of American progressivism. For him, patriotism is the last refuge of the taxman.
It should give him and his allies pause that Canada — boring, socialistic Canada — is a tax haven compared with the United States. We now have a corporate tax system that combines the highest nominal rate in the developed world, at 35 percent, with loopholes that benefit special interests and the politically connected. On top of this, the U.S. — in a rarity for the developed world — imposes its high tax rate on overseas earnings.
Burger King says it is making a purely business decision, and it is true that the merger makes sense strictly on the merits. But Burger King could have made exactly the same business decision and kept its headquarters in Miami. For that matter, it could move its headquarters to New York City and pay higher taxes still, in an awe-inspiring act of patriotic commitment.
It is not that Burger King is “shirking” on taxes on its U.S. business through its move. It will have to pay U.S. rates on that regardless. It is avoiding paying the high U.S. taxes on its overseas business, and avoiding what would in effect be a tax increase for Tim Hortons by making it subject to the U.S. system.
If this seems unscrupulous, consider the wisdom of the Sage of Omaha, Obama’s go-to economic mascot, whom he has often used to make arguments from authority. “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,” Warren Buffett told Fortune magazine this year.
So it shouldn’t be a surprise that he evidently has no compunction about helping to finance a deal widely derided for minimizing Burger King’s taxes.
Despite all the yowling and patriotic chest-beating, our corporate tax system isn’t the Declaration of Independence, or the Golden Gate Bridge, or the GI Bill. It is an ungainly, politicized disgrace that unduly burdens American business. The best way to keep American companies from wanting to flee it is simply to reform it.
It’s either that, or try Warren Buffett for treason.