Tax Inversion Deals

Warren Buffett's Berkshire Hathaway will finance approximately $3 billion for Burger King's planned acquisition of Tim Hortons, which is located in Canada. Of course, there is nothing wrong with financing this  acquisition by Buffett. But, this is when this financial transaction gets very interesting, because Buffett is backing Burger King, who will move its headquarters from Florida to Canada where corporate taxes are much lower. How low? The U.S. corporate tax rate is 39.1%, but 26.5% in Ontario, Canada, where Tim Hortons is based. (The 39.1% nominal corporate tax rate in the U.S. includes national, state, and city-level tax rates, which is the highest across all 34 Organization for Economic Cooperation and Development (OECD) member countries. Canada's, by comparison, is 26.5%.)

This "inversion deal" will allow Burger King to shift its entire corporate tax liability from the United States to a much lower tax cost country (Canada).  Now, there is nothing wrong with trying to reduce one's tax bill, but Buffett has supported President Obama's push to increase taxes on the wealthiest individuals while making deals to reduce taxes on his own entities. I guess the old adage applies here to Mr. Buffet that states, "Do what I say, not what I do."  

A simply solution would be for the United States to reduce its corporate tax rates to be more competitive in the world environment. That would be one great way to stop these "Inversion Deals." What say, you?