(Image courtesy of Creative Tools on Flickr)
Burger King added its name to the list of American companies potentially looking to move out of the country in order to dodge its tax bill.
The strategy is called a “tax inversion,” in which a company moves its legal base (a domicile) to another country to avoid taxes in their original country. In this case, news broke last Sunday that Burger King is looking to buy the Canadian cafe and restaurant, Tim Hortons, so the company can move its domicile to Canada and avoid U.S. taxes.
On Monday, Warren Buffet jumped into the fray saying that he would finance part of the takeover deal. An about face, given the fact that he had been a stanch advocate of wealthy Americans paying their fair share of taxes.
The underlying problem is the high U.S. corporate tax rate and unfavorable tax structure, which is making tax inversions enticing for corporations looking to reduce their tax liability. It’s a situation that Congress needs to sort out, but probably won’t until after November’s election.
While the move makes sense for BK financially and for its shareholders, there’s something distinctly Un-American and unpatriotic about companies completing a tax inversion. A private corporation that was born, raised, and supported by the American public and derived a profit from public benefit (i.e. redeeming food stamps, in this case) has the upmost moral duty to support the communities they serve and to help their country prosper. Doing an end-run around their tax bill is the antithesis of that spirit. Just because they can doesn’t mean they should. As Americans and customers, we should be fighting mad.
Until Burger King officially announces that it is not going to take advantage of the benefits from a tax inversion strategy, the image above of an upside down Burger King crown is displayed in protest. Take it to symbolize the fact that BK management does not deserve to lead an American born-and-raised company.
Update, August 26, 2014 @ 10am Pacific: Burger King has official announced that it will buy Tim Horton’s. The parent company will be based in Canada, but each brand will be operated from their respective countries. However, there’s no word yet if BK will take advantage of their new Canadian heritage to squirrel away their profits in Canada, in hopes of avoiding U.S. taxes.
Update, August 26, 2014 @ 3:30pm Pacific: BK has taken to Facebook and Twitter to say they’re not moving to Canada, per se. And they’re not going to dodge U.S. taxes. Here’s a great breakdown by Yahoo! Finance on how large of a tax bill BK would be dodging.
We hear you. We’re not moving, we’re just growing and finding ways to serve you better. https://t.co/NjTrPDbqGE
— Burger King (@BurgerKing) August 26, 2014