Tuesday, 26 August 2014

The Burger King Story

When I joined the Air Force in August of 1977....the finance guys asked me what I wanted for a state of residence.....which translated over into state taxes.  I didn't really grasp the question, but just naturally answered Alabama.  So for the next three years, I paid Alabama state taxes.  I doubt if I ever paid more than $300 a year....because a young airman just doesn't make that much anyway.

When I got to Tacoma, Washington in 1980, they let me know right away that Washington was one of those states without a state income tax, and it'd be smart to change your status.  I didn't really think much about it......but around a year later as I was getting ready to leave the region, I changed my status to a Washington resident.  For the remainder of my career, I was a Washington resident and paid no state taxes.

Around 1989, I came to arrive in Arizona, and this topic came up in a finance briefing.  They tossed up a slide of what a E6 and a O3 would pay per year for various states.  For Bama, I would have paid around $950.  For Kentucky, it was closer to $1300.  They were encouraging folks to figure some method of getting Texas residency (that was popular then) and pay no states taxes.  It simply made sense.

While at the Pentagon in 2010 to 2013.....I came to work around a number of Army personnel, who mostly all claimed Texas as their state of residence.  So they paid no state income tax.

I bring this up....because today.....Burger King announced that it was buying Hortons of Canada....a Bar-B-Q chain....and moving their headquarters to Canada.  The US corporate rate of taxation is around 38-percent, while Canada is around 15-percent.  Various news idiots are giving two or three different rates for each, which makes it awful confusing.  The bottom line is that BK will save millions by shifting the headquarters there.

Naturally, on the Business Channel....a couple of congressmen and senators are all upset and talking about business operations not being patriotic and paying their fair share of taxes.  I kinda sat there and wondered who blessed them to come up with a "fair-share" number and say that's ok and fair.

I don't have much of a problem with this corporate mentality.  It's their right.  If you want to make it a legal mess....just tell them they can't move anywhere, period.  While you do that.....also make up a rule that congressmen and senators need to keep their residence back in their home state and actually just maintain a hotel room while living in DC.

If you look around....there's around five or six states which are deemed as harsh places for any company to set up a headquarters.  There's around a dozen states (like Texas and Alabama for example)....where the state goes way out of its way to talk folks into moving their business operation into their states....mostly by lowering all corporate taxation at the state level.  I don't see congress or the senate jumping into this business or trying to put a fist down on Texas being openly friendly to attracting new companies.

Where does all this lead onto?  I sat there one day and figured that over a twenty-two year career.....I probably saved around $20,000 that went into my pocket.....rather than the state tax revenue bucket of Alabama. Basically a new pickup.  For a company like Burger King, what they'd save over twenty years....probably would amount to way over a billion dollars.  It means a good bit if you think about it.

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