Rod Warren's  Instablog

I do not believe that moving Tim Horton's headquarters from US to Canada  is in the interest of long term shareholders due to the extremely high personal long term capital gains taxes that long term shareholders will have to pay for tax year 2009. These personal imputed capital gains taxes are very likely to exceed the corporate tax savings.

The proposed reorganization will cost me somewhere between $5.41 and $8.12 per share in imputed capital gains taxes for tax year 2009 to allow the company to save up to $.24 per share per year in corporate taxes. While those lower corporate tax rates may apply for several years, that is a LOUSY return on my "investment" and the prospectus admits that the tax savings may not be realized in future years.

I have a very low cost basis in THI that was spun off from Wendy's that I bought in 1980, but even more recent investors are likely to get have high capital gains taxes if the reorganization goes through.  The proposed merger unfairly shifts the tax burden from THI as a corporation to the long term THI shareholders personal taxes due to the imputed long term gains that US and Canadian federal tax laws impose on shareholders of companies that relocate.

Please join me in rebuffing the board's ill advised proposal that makes long term investors pay far more in personal taxes than the company will save in reduced corporate taxes.

I ask all THI shareholders to vote no on the proposed merger in the 09/22/09 Special Meeting as a way of saying it is morally wrong for the board to screw long term shareholders to achieve minor savings for short term investors and traders.