Burger King is going to have it Tim Hortons’ way, and Warren Buffett will be their server today – or at least their financier.
The Burger King deal seems to be one part tax inversion and one part market diversification, but critics have focused mostly on the former. With the combined company moving its headquarters to Ontario, Burger King is set to join the ranks of corporate expatriates.
Democrats are none too pleased. “Burger King’s decision to abandon the United States means consumers should turn to Wendy’s Old Fashioned Hamburgers or White Castle sliders,” declared Sen. Sherrod Brown. “Burger King has always said ‘Have it Your Way’; well my way is to support two Ohio companies that haven’t abandoned their country or customers.”
Presumably, President Obama agrees. After all, it was just last month that he announced – in words that would have made Franklin Roosevelt proud – that inversions are wrong even if they’re legal:
- When some companies cherrypick their taxes, it damages the country’s finances. It adds to the deficit. It makes it harder to invest in the things that will keep America strong, and it sticks you with the tab for what they stash offshore. Right now, a loophole in our tax laws makes this totally legal – and I think that’s totally wrong. You don’t get to pick which rules you play by, or which tax rate you pay, and neither should these companies.
Railing against companies is one thing, but what will Obama do about his old pal Buffett? The Oracle of Omaha has been one of the president’s key supporters– not to mention the inspiration for his “Buffett rule” tax proposal.
If it’s wrong to invert, isn’t it also wrong to finance an inversion?
More than a few critics have already called Buffett a hypocrite. “I think for a guy talking about the wealthy need to pay their taxes, he has some explaining to do,” said MSNBC host Joe Scarborough. Co-host Mike Brzezinski agreed, suggesting that Buffett’s role in the deal “doesn't mesh with his message.”
But that conclusion depends on what you think Buffett’s message really is. Yes, he has repeatedly argued that rich people should be required by law to pay higher taxes. And he may even believe that profitable corporations have a duty to pay up, too.
But Buffett has always made clear that he supports changes to the tax law, not voluntary changes to personal or corporate tax behavior. As he said last year, “I will not pay a dime more of individual taxes than I owe, and I won’t pay a dime more of corporate taxes than we owe. And that’s very simple.”
Buffett’s position is completely reasonable. After all, it’s the same standard most of us use in our personal tax lives. Few of us pass up tax benefits, even when we’re not convinced of their public purpose or economic utility.
How many opponents of the mortgage interest deduction, for instance, decline to take the deduction when filing their own tax returns How many champions of single-payer healthcare voluntarily pay taxes on the value of their employer-provided healthcare? How many parents shopping for back-to-school clothing send a check to the state revenue commissioner to offset a sales tax holiday?
Not many. Nor should they. Integrity isn’t measured by a person’s willingness to be a chump. It’s perfectly acceptable (most of the time) to live by the laws as they exist, even as you campaign for a change to those laws. There are exceptions, of course – but not many when it comes to tax policy.
After all, taxes are a forced extraction, not a gift. If the government doesn’t ask for it, then you don’t have to pay it. Not legally and not morally.
Buffett is not a hypocrite. He’s a guy who knows he has a good thing going but is decent enough to acknowledge that society should ask more of him.
Want to know what real hypocrisy is? It’s feigning outrage about inversions while refusing to consider any realistic action to curb them.