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Burger King to become the latest tax refugee and abscond to Canada

AUGUST 25: People walk past a Tim Horton's cafe in Manhattan
AUGUST 25: People walk past a Tim Horton's cafe in Manhattan
Photo by Spencer Platt/Getty Images

It looks like Burger King is going to be the latest American corporation to become a tax refugee, absconding away from the country in order to avoid corporate income taxes as 35 percent, according to a Monday story in Forbes. Burger King is going to use a tax inversion scheme to become a Canadian company. The corporate income tax rate in Canada is 15 percent, with a provincial rate in Ontario of 11.5 percent. The combined 26.5 percent rate is considered appealing enough to send Burger King north.

The way it works is that Burger King will buy Canada’s version of Dunkin Donuts, Tom Horton. The law states that Burger King can then become a Canadian company for tax purposes if shareholders of Tom Horton wind up owning at least 20 percent of the shares of Burger King. Combining all relevant taxes, Canada inflict just 53.6 percent of the tax burden the United States does on corporations.

It goes without saying that the move has a political dimension, according to Hot Air. President Obama has threatened to use his executive authority to try to prevent the stream of corporate tax refugees from leaving the United States. The phenomenon has become a Democratic issue. The left has started to decry “corporate deserters” and are demanding that something be done to force companies to stay in the United States. MSNBC, including the nominally Republican Joe Scarborough, is calling for a boycott.

The whole spectacle has the aroma of commissars in the old Soviet Union denouncing people who wanted to move to the West as enemies of the people. There is one solution that seems not to occurred to the president and other critics of tax inversion. The United States could simply lower the corporate tax rate to make them competitive with the rest of the developed world. Then foreign companies would start flocking to the United States for a change,