Tomahawk, WI 08/28/2014 (Basicsmedia) – Burger King Worldwide Inc. (NYSE:BKW) definitive agreement to acquire Tim Hortons Inc. (USA)(NYSE:THI) for $11 billion continues to elicit debate with Billionaire, Marc Cuban, in an interview on CNBC vehemently opposing the way companies are using inversions to escape high tax bills back home. Mr. Cuban believes that inversions only result in a decrease in net-worth of many people.
Companies in the U.S are buying startups abroad as one of the ways of shifting their headquarters, to avoid paying high taxes in the U.S.. Burger King Worldwide Inc. (NYSE:BKW) has rubbished claims that it acquired Tim Hortons Inc. (USA) (NYSE:THI) for inversion purposes maintaining the merger is only for expansion purposes.
Inversions according to Mr. Cuban go a long way in benefiting companies in terms of share price and cash balances but with huge repercussions to ordinary citizens. On the other hand, Cuban sees a scenario where the government will always be forced to increase taxes in other areas of the economy to counter the reduced revenues from companies that might have shifted their headquarters abroad.
“People think that the purpose of stock is to buy a stock and watch it go up in price that is not the point. The point is to see you’re net worth increase,” said Mr. Cuban.
The increase in the number of companies carrying out inversion results in a reduction in tax revenues for the government. The impact is that ordinary citizens will always be forced to pay more to cater for the deficit. Even though shareholders stock price would go up as a result of an Inversion, they always end up paying the same amount in one way or another in different forms of taxes.
Mr. Cuban approves Burger King Worldwide Inc. (NYSE:BKW) Move to acquire Tim Hortons Inc. (USA) (NYSE:THI) maintaining that the deal suits them both as it will allow them to grow together, to become a stronger entity.
“Every company gets to make their own choice as I do as a consumer, but at the end of the day; the choices they are making are they increasing my net worth or decreasing my net worth? And from what I have seen on Tax inversions. They are decreasing my net worth and a lot other people,” said Mr. Cuban.