Wednesday, August 27, 2014

Burger King and King Sugar. One wants to pay less taxes and the other wants to receive more tax dollars. One is way worse than the other.

Ah, the arrogance of royalty.

The freak-out continues over Burger King moving to Canada because of the purchase of a MUCH larger company (Tim Horton's).  

Last year BK paid about $88 million in taxes to the US Federal government.  The US Treasury will "lose" this money (maybe more, maybe less depending on future profits) in tax revenues.

BK is labeled unpatriotic and subject to boycott.

Below is an excerpt from Bloomberg.  
"...Because of a plunge in U.S. sugar prices amid a hefty crop of sugar beets and cane, the Agriculture Department estimates that it may have to buy 400,000 tons of sugar from processors who might default on $862 million in government loans. Sugar producers have the option of repaying the loans either with cash or with their harvests if prices fall below a certain level. 
This is all part of a confection of federal price supports and subsidies for the industry. Last year, sugar processors took out loans when U.S. prices were about 25.5 cents a pound. Prices have since declined to 21 cents, just a hair above the trigger price that lets them repay their loans with raw sugar. 
The sugar, by law, would be sold to ethanol refiners, who would pay 10 cents a pound less than the government paid -- an inducement needed to get the ethanol industry to use the sugar. Aside from the ridiculousness of piling one ill-advised subsidy atop another, this would produce a loss of $80 million for the U.S. Treasury. Some industry analysts estimate the government may have to buy as much as 800,000 tons of sugar to restore balance to U.S. stockpiles, potentially doubling the loss..."---Bloomberg (Opinion piece)

Twisted, ain't it?

An equal (or greater) number of tax dollars are LOST to support raw sugar producers, who are a small in number but a politically potent group...And who cares?  I hear crickets.

Concentrated benefits, dispersed costs.  Crony-Capitalism.  Multiply this example 10's or 100's of times. Don't believe me? Read the Farm Bill.  Makes Burger Kings lost tax revenue look like the Dollar Menu.

And people call Burger King's move a "Whooper" of a mistake.

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