If you needed another reason to avoid Burger King restaurants, besides the food, there is the recent move by the fast food firm to relocate its corporate headquarters to Canada after acquiring Tim Hortons Inc. for roughly $11 billion. While Burger King Executive Chairman Alex Behring claims the move is “not being driven by tax rates,” the tax benefits for relocating to Canada are considerable which is one of the reasons why so-called tax inversions by US companies have become so common.
Not surprisingly US lawmakers issued statements saying they were upset by the merger citing both Burger King’s roots in America and clear move to dodge US taxes. Senator Sherrod Brown even called on Americans to go to other American fast food companies such as Wendy’s and White Castle saying “”Burger King’s decision to abandon the U.S. means consumers should turn to Wendy’s Old Fashioned Hamburgers or White Castle sliders.”
“Burger King is a household name, and this will focus the public’s attention on this issue in a way that earlier inversions did not,” said Rep. Chris Van Hollen (D., Md.), the top Democrat on the House Budget Committee. He predicted that the Democratic-run Senate would try to pass anti-inversion legislation soon and that Democrats would continue to push for a similar vote in the GOP-run House.
In an inversion, a U.S. firm relocates—usually through a merger with a smaller company—to a country where tax rates and rules are perceived to be friendlier, but it typically continues to be managed from the U.S. While inversions have occurred off and on for years, they are getting fresh attention in Washington amid a new wave of company departures.
Republicans in Congress also spoke out against the Burger King inversion plan but blamed the tax code as being anti-competitive rather than citing the company for being unpatriotic and exploitative. The question is will the prominence of a Burger King dodging US taxes bring enough public attention and anger to force Congress to act on stopping inversions or will Burger King’s behavior go unchallenged.
For its part Burger King plans to manage the company in a near identical way despite changing its legal headquarters to Canada. The company will still be managed in the US out of Miami.