Cash is king for Burger King, and all the howling by Democrats about how the fast-food chain is “abandoning its country” won’t change that fact.
New York would do well to take note.
Tuesday, Burger King announced plans to merge with Canadian-based coffee-and-donut firm Tim Hortons, with the new company to be based in Canada. While BK says the $11 billion deal was not “tax-driven,” its new north-of-the-border digs will nonetheless help it trim at least some of its US taxes — namely, those on foreign income.
The move is known as an “inversion,” and so many US firms are taking this route that President Obama has bashed them for their “herd mentality.” Obama & Co. are embarrassed by the corporate flight — and irked that they’ll be losing hefty tax revenues.
Don’t blame the firms: US corporate taxes are the highest in the world. Companies have fiduciary duties to maximize returns. Naturally, they’ll seek lower-tax addresses whenever it makes economic sense.
The Burger King deal is just more evidence that taxes matter. The higher they are, the more businesses — and residents — will seek measures to avoid them, even if it means relocating. New York has seen this trend big-time, both in terms of companies and citizens shunning the state.
Indeed, since 2000, we’ve lost 2 million people to other states, the Empire Center notes. Businesses, too, find it difficult to operate here: Upstate New York long ago became an economic wasteland. The fact that our taxes are the highest in the nation plays a key role in fueling the exodus.
Yet New York pols, from Bill de Blasio to Andrew Cuomo, resist tax cuts. Instead, the goal is usually to raise levies higher still: Three years ago, Cuomo pushed through a “millionaire’s tax.” This year, de Blasio (unsuccessfully) sought one for the city, too.
The irony, as the Burger King deal shows, is that high tax rates can lead to less tax revenue, and conversely lower levies can help retain firms and revenue — even as those firms boost the economy. For New York, that would be a double blessing.