On Tuesday's CNN Newsroom, Carol Costello refreshingly complimented Burger King's planned merger with Canadian restaurant chain Tim Hortons as a "very smart business move" that will "save the company money." Costello turned to CNN correspondent Christine Romans, who spotlighted how "corporate taxes are lower in Canada than they are in the U.S.," and that "the stock is up because everyone on Wall Street...thinks this is going to lower the tax bill for Burger King."
The anchor also brought on Curtis Dubay of the conservative Heritage Foundation, who underlined that "our tax code makes it uncompetitive around the world. And so, they're doing something to get out from under that burden. They're doing what's right for their shareholders and their owners....What has to be done is the tax code has to be reformed. We have to have corporate tax reform." This prompted Costello to lament that Congress probably won't do anything to reform the tax code: [MP3 audio available here; video below the jump]
CURTIS DUBAY, SR. POLICY ANALYST, THE HERITAGE FOUNDATION: ...The best way to fix it, though, is for Congress to act. I know it's a big lift. I know Congress hasn't done a whole lot. But we've known for a long time we need to reform the tax code, and that's – that's the proper way to stop the inversion issue, and they can do it if they set their minds to it. The things they're discussing now will have almost no impact on slowing down these inversions.
CAROL COSTELLO: Okay. Well, that leaves me kind of depressed, and I hate that. (laughs)
Costello then asked Romans to summarize the details of the planned merger. The business journalist pointed out, in part, that "corporate taxes are lower in Canada than they are in the U.S.," and added that "the very young management team of this company clearly thinks that they can make more money – better money as Burger King/Tim Hortons together than separately."
The CNN anchor spent the rest of the segment on the high corporate tax rate in the United States:
COSTELLO: So Curtis, there are calls for boycotts, but does Burger King care?
DUBAY: Probably not. I mean, they're doing what's right for their company. Our tax code makes it uncompetitive around the world. And so, they're doing something to get out from under that burden. They're doing what's right for their shareholders and their owners.
What's bothersome is that – Congress is bothered by this – we're all bothered by this – but the plans they're coming up will do nothing to stop these inversions. What has to be done is the tax code has to be reformed. We have to have corporate tax reform. We have to lower the rate. We have to modernize the system to stop these inversions from keeping on happening.
COSTELLO: Okay. So I'm laughing, Christine. (laughs) So, Congress will actually have to do something to stop this and-
ROMANS: Yeah. I mean, Congress reforming the tax code is – I mean, I don't even know what kind of odds I would give that at this moment – you know, because that's what's so difficult. Reforming the tax code is very difficult – 16 bound, big books like this. One of the things we know is that a lot of companies are doing this, Carol. It's been a lot of drug companies. It's been a lot of medical device companies – some 47 over the past decade. And while you hear people like Senator Sherrod Brown – even yesterday, Josh Earnest, who's the White House spokesperson, said – you know, not talking about this deal in particular – but saying that the President thinks it's unpatriotic for companies to be able to move overseas to lower their tax burden, because the American people can't do that.
Nobody likes it, but a company's job is to return value for shareholders. And so, what's happening in these cases is shareholders are making money. People who invest in these companies are making money. The private equity, who have, in some cases, saved these companies, are making money. But the United States Treasury loses revenue, and that has to be made up somehow.
COSTELLO: Okay. So, Curtis, the President says it may be legal, but it's wrong. And, as Christine pointed out, he also says it's unpatriotic. But can the President do anything on his own to stop companies from implementing inversion?
DUBAY: Maybe. We're not sure yet. The Treasury Department is looking at it, and trying to figure out if it can use the rules and regulations at its disposal to slow down this process. The best way to fix it, though, is for Congress to act. I know it's a big lift. I know Congress hasn't done a whole lot. But we've known for a long time we need to reform the tax code, and that's – that's the proper way to stop the inversion issue, and they can do it if they set their minds to it. The things they're discussing now will have almost no impact on slowing down these inversions.
COSTELLO: Okay. Well, that leaves me kind of depressed, and I hate that. (laughs)
ROMANS: Well, if you have Burger King shares in your 401(k), then your 401(k) will be up a little bit.
COSTELLO: Oh, okay! Sadly, I don't. Christine Romans, Curtis Dubay, thanks to both of you. I appreciate it.
