Burger King is in talks to buy doughnut chain Tim Hortons and create a new holding company headquartered in Canada, a move that could shave its tax bill.Laffer? Laffer?
Such an overseas shift, called a tax inversion, has become increasingly popular among U.S. companies and a hot political issue. Burger King was founded in 1954 with a single restaurant in Miami, where it is currently based.And where there is no state income tax, we add.
Shares of Burger King and Tim Hortons both jumped 17 percent before the opening bell, heading toward all-time highs.The market tested positive.
In a tax inversion, a U.S. company reorganizes in a country with a lower tax rate by acquiring or merging with a company there. Inversions also allow companies to transfer money earned overseas to the parent company without paying additional U.S. taxes. That money can be used to reinvest in the business or to fund dividends and buybacks, among other things.And enrage politicians in the higher tax countries who want the the money for their own selfish purposes (enhance their power over others' lives).