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Burger King Essay

argumentative Essay
725 words
725 words
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The United States taxes the worldwide earnings of its legal residents. (DEFINE INVERSIONS) However, after inversions, the government cannot impose taxes on most of the non-U.S. earnings of multinational corporations. It is true that some corporate inversions take place due to legitimate, non-tax, and business-related reasons. However, almost all of the corporate inversions, through skillful tax planning (or “legal manipulation,” as I like to dub it), allow U.S. multinational companies to avoid paying significant amounts of U.S. tax—both on income they earned prior to the inversion and on that they will earn in the future.
On August 26, 2014, Miami-based Burger King confirmed plans to buy Tim Hortons for about $11.4 billion (C$12.5 billion). …show more content…

In this essay, the author

  • Explains that the united states taxes the worldwide earnings of its legal residents. however, after inversions, the government cannot impose taxes on most of the non-u.s.
  • Explains that burger king confirmed plans to buy tim hortons for about $11.4 billion. this acquisition marks the birth of a new fast-food giant, which will be based in canada.
  • Disagrees with burger king's decision to re-dominate to canada, arguing that it should not seek benefits of lower corporate taxes and become a multinational company.
  • Explains that they seek to understand inversions and proscribe abolishing them by examining the manifestation of the status quo within the burger king – tim horton merger.
  • Explains that multinationals may never pay u.s. tax on deferred income unsettled at the time of an inversion.
  • Argues that u.s. multinationals can use corporate inversions to avoid tax on deferred income. this is clearly doing business without social justice and/or a sense of morality.
  • Explains that the u.s. government cannot enforce taxes on future foreign profits. the multinational company can now expand internationally without worrying about the taxation of new profits from international operations.

In defense of the company displacement, Burger King Executive Chairman Alex Behring said in an interview with The Wall Street Journal that the decision is not driven mainly by tax benefits. Instead, “[the case] is fundamentally about growth and creative value through accelerated expansion.” Whether his arguments are true or not, I disagree with Burger King’s decision to re-domicile to Canada. Regardless of the reasons that Burger King provides to justify its relocation, the very fact that it moves to the country where the corporate tax rate is much lower than the U.S. does not change. After all, there is no transparency in Mr. Behring’s motives behind the decision. I believe that Burger King should not seek benefits of lesser corporate taxes and become a multinational …show more content…

tax on the deferred income unsettled at the time of an inversion. Although the government taxes businesses’ global incomes, U.S. multinational companies are permitted to delay paying U.S. tax on their foreign earnings until they reinvest them in the U.S. companies. However, deferred income not yet repatriated at the time of an inversion will likely never be subject to U.S. tax. Inversion is, in essence, structured to accomplish this. In fact, it creates new options for the U.S. multinationals to use and benefit from the untaxed, unearned income without causing U.S. tax. Naturally, the savings coming from eliminating tax on unearned revenue may make a change in domicile worth it for some companies (As a matter of fact, numerous U.S. multinational companies hold billions of dollars in their deferred accounts.). And, the faster U.S. multinationals can shift income out of the country before an inversion, the better. I do not know how Burger King is going to deal with this particular issue. However, given that businesses can benefit from this income shifting, why wouldn’t Burger King executives take advantage of

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