One View of Burger Kings Relocation Decision

By MORGAN GOLDSTEIN

Businesses have a responsibility to be profitable for their shareholders, investors and employees; so it is no surprise that they will take advantage of every opportunity to lower overhead costs, such as taxes, which is exactly what Burger King did when they announced relocating their headquarters to Canada.

The second largest fast food chain in the world bought the Canadian coffee chain Tim Hortons for $11.5 billion. This acquisition enables Burger King to relocate their headquarters to a country with lower corporate taxes that will ultimately save them millions each year. With a dramatic corporate tax change from 30 percent in the United States to a mere 15 percent in Canada, Burger King will have a brighter financial future.

According to The Street, “in the second quarter of this year, Burger King’s federal and state income taxes were 24% of its operating costs and 34% of its profits. Locating in Canada would cut those figures by up to 25%.” That means out of every dollar Burger King took in as revenue 34 cents of it were given to the government as taxes. Relocating to Canada will result in the fast food chain to keep nine more cents, which translates to millions every year.

The fast food giant has just purchased the Canadian chain, Time Hortons. Stock Photo.
The fast food giant has just purchased the Canadian chain, Time Hortons. Stock Photo.

Burger King is the latest company to relocate their headquarters overseas in order to avoid high corporate taxes. At least ten other businesses have fled America to avoid paying nearly 40 percent in taxes, including state, local and corporate taxes, which is the highest among any industrial nation in the world.

Now that the United States is missing out on over 3 million dollars in taxes revenue from Burger King per year, the House of Representatives need to take a hard look at the corporate tax structure. With the power ofthe purse, the House of Representatives have a moral and fiscal obligation to lower the punishing taxes that shackle businesses and drive innovation out of America.

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