Scene in Passing: Have it your way, but where’s the beef?
August 26, 2014
Advertising slogans often capture the public imagination because they captivate that inner resonance where the "ah hah" trigger resides.
My own "ah hah" trigger and memory were tripped upon learning Burger King, which is not what it says it is (McDonald's is), began merger talks with Tim Hortons, a Canadian bakery and coffee outlet company. This possible merger has some people up in arms over prospects for a tax inversion. Briefly, a tax inversion by a U.S.-based firm gives said firm a tax advantage by merging with another outside the country where the combined firm's headquarters go.
"Have it your way," is a famous ad slogan Burger King used to chase the real king of burgers years ago. It could prove a mega-metaphor encompassing the entire tax inversion debate. Many view inversions as businesses being selfish, unpatriotic deserters. Such terms, or their equivalents, have escaped the lips of President Obama and some in Congress, though not from Obama's at this writing about the Burger King-Tim Horton talks.
Obama supporter Warren Buffet, the billionaire investor, may be involved in this complex Burger King-Tim Hortons deal if it gets done. This bemuses; Buffett, a whiz at investing with tax consequences in mind, often has positioned himself as a guy who thinks the rich should be taxed more. Public posture notwithstanding, only a nitwit doesn't use the tax code to his own advantage once the rules are known.
Buffett certainly is no nitwit. In some cases neither are corporate executives looking to make deals. But if you think inversions are the only reason such deals get struck, you also believe the Lone Ranger's silver bullet made him invincible. No one does a deal for just one reason. To use another advertising slogan of long-standing repute, this one from Wendy's, "Where's the beef?"
The beef in any merger is in synergies that might include a tax inversion, but wouldn't rest on such a silver bullet alone. In business, some deals succeed, some fail and some get rained out.
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As Buffett would tell you, no deal works if products involved don't produce profits. An inversion, while it might help, won't make one good company from two bad ones. There is no knowledge here whether Burger King, an international firm selling fast food that I don't eat, and Tim Hortons, a Canadian coffee and donuts purveyor I've never experienced, are either good, bad or indifferent. And no one knows their tomorrows.
What you can count on, however, is inversions will continue until U.S. tax reform initiatives move from the barely talking stage to reality. Why? Money seeks the best haven for capital investment much as water flows down hill.
The president and Congress might do better to strike a deal in their own workplace rather than casting aspersions on deals struck by others in a competitive international arena.
John Barrette covers Carson City government and business. He can be reached at firstname.lastname@example.org.
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