Burger King in Talks to Buy Tim Horton's and Move to Canada.

Specifically, I want you to summarize the article, provide a link to the article, indicate why it is important or how it is relevant to the law, provide a brief analysis of the ethical issue(s) involved and your opinion on the ethical issues. For example, if you are a sports fan, there are a lot of articles about the intersection of sports, law, and ethics, e.g., steroid use/abuse, concussions in the NFL, etc. If you read Sports Illustrated or other sports news on a regular basis, you may just blog about those types of legal issues. Articles must be from reputable sources such as major newspapers (e.g., New York Times, Wall Street Journal, and Bloomberg.com), major magazines (e.g., TIME, The Economist). Note that if you reference another source in your analysis or opinion, you must provide appropriate attribution.

SAMPLE BLOG POST

ARTICLE TITLE: Burger King in Talks to Buy Tim Hortons and Move to Canada

LINK: http://dealbook.nytimes.com/2014/08/24/burger-king-in-talks-to-buy-tim-hortons/

SUMMARY: Burger King, a fast food restaurant chain with locations around the U.S. is in talks to purchase Tim Horton’s, a Canadian fast food operation. If the deal goes through, Burger King’s current plan is to move its headquarters to Canada and thereby reduce the amount of U.S. corporate taxes the company would pay. This practice of a U.S. company purchasing a smaller foreign company and then moving its headquarters to another country is called a “corporate inversion”. It is becoming increasingly popular. It is particularly popular among multi-national companies with financial holding overseas. If such companies bring their cash to use in the U.S. they get hit with a big tax bill. Moving their headquarters overseas apparently gives them access to that cash without having to pay a higher tax to the U.S.

ETHICAL ANALYSIS: These inversions are generally lawful business practices. Pfizer, a major pharmaceutical company was going to engage in the practice when it made a bid for AstraZeneca, a UK company. The deal fell through, but Pfizer is rumored to still be considering undergoing a corporate inversion to avoid some U.S. taxes. AbbVie, an Illinois pharmaceutical company is purchasing Shire a UK pharmaceutical company and AbbVie plans to move its headquarters to the UK after the purchase is complete. Walgreens, a large drug store in the U.S. recently announced that it was planning on undertaking a corporate inversion, but the company backed away from the plan after customers threatened to boycott the company and various government officials urged the company not to go through with the plan. Although these inversions may be lawful, in my opinion they are unethical. These companies are seeking money out of the pockets of U.S. consumers as well as the federal government and states, but at the same time the companies want to avoid paying their fair share of taxes. In addition, the American people subsidize many of these major multi-national corporations. The conservative libertarian Cato Institute has estimated that “corporate welfare” costs taxpayers $100 million per year which equates to $870 per family. (Slivinski, 2014) Moreover, “effective” corporate tax rates in this country are nowhere near the 35% that most companies and politicians cite when arguing that corporate tax rates are too high. Some argue that the corporate tax rate is 39.1% in the U.S. when combining state and federal taxes. (Bartlett, 2013) Those seeking reductions in corporate tax rates frequently argue that the U.S. rate is higher than other industrialized nations. (Ferdman 2014) Few U.S. companies pay anywhere near the maximum corporate tax, instead the average is closer to 12%. (Paletta, 2012) Any company operating within the boundary of the U.S. is utilizing the roads, bridges, sewers, water treatment, police and fire departments, schools, etc. of a community that have been funded by the taxpayers. Companies need to pay their fair share of the cost of the infrastructure that supports their business operations. Giving their headquarters a new address so as to reduce their tax bill is unfair and unethical.

REFERENCES: Bartlett, B “Effective Corporate Tax Rates” The New York Times, November 26, 2013. http://economix.blogs.nytimes.com/2013/11/26/effective-corporate-tax-rates/ (accessed August 26, 2014).