For a long while, President Obama has preached about “economic patriotism.” This means that companies should stop using loopholes within our tax system in order to move their headquarters overseas in order to avoid high U.S. tax rates.
Keep in mind that the United States currently has the highest corporate tax rate in the OECD. The federal rate is 35% but averages a combined 39% if you include state and local taxes.
In a weekly address earlier this summer, Obama said the following:
“The best way to level the playing field is through tax reform that lowers the corporate tax rate, closes wasteful loopholes, and simplifies the tax code for everybody. But stopping companies from renouncing their citizenship just to get out of paying their fair share of taxes is something that cannot wait. That’s why, in my budget earlier this year, I proposed closing this unpatriotic tax loophole for good.”
But for now, the loophole still exists and one of Obama's buddies decided to jump right through it: Warren Buffett. Buffett similarly preaches about the need for Americans and businesses to “pay their fair share.” In fact, the White House named “The Buffett Rule” after him, which is the concept that millionaires shouldn't pay a smaller share of their income than middle class Americans.
Today it was revealed that Warren Buffett will help to finance Burger King's acquisition of Canadian company Tim Horton’s, which will also result in Burger King becoming a Canadian company. Why? In order to lower its corporate tax rate.
It's one thing for Obama and his friends like Warren Buffett to preach about economic patriotism. But apparently that only goes so far, and doesn't apply to their own practices. The hypocrisy is jarring.