U.S. corporations including Burger King, Medtronic Medical Devices and Chiquita Banana and many others that have merged with foreign firms and shifted their headquarters to avoid U.S. taxes, may not only come under scrutiny by the IRS but also by consumers who recognize that this activity is unpatriotic and damaging to our nation.
Some conservatives point out that publicly traded companies have a primary responsibility to the shareholders and saving loads of tax dollars meets this responsibility. Balances against that, costs to the U.S. treasure are massive. The Joint Committee on Taxation stated that the nation will lose $20 billion in tax revenue in less than 10 years. Others think the losses will be much higher.
As Congress is in its typical gridlock mode, there is a force which could change the course of the corporate deserters and that is the buying and boycott power of the American consumer. Burger King, which presently pays about 35% in taxes, when there are no losses, might be able to reduce that to about 7% if it shifts its operations to Canada. However, given that most of the Burger Kings are in the U.S., if there was a consumer boycott, stock prices would plummet and sales would stagnate, offsetting by far any tax advantages.
Recently, CVS Caremark was thought to be considering a corporate inversion similar to other companies. However, the decision was made not to do so and the company Chief Executive Larry Merlo met with senator Charles Schumer urging him to act to stop the rash of expatriations. Otherwise, CVS might be forced to do it too. United Consumers could make the difference where bottom line profits are at stake.
Jeffrey Newman represents whistleblowers.