Author Topic: Burger King going to Canada?  (Read 291 times)

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Online rangerrebew

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Burger King going to Canada?
« on: August 26, 2014, 05:57:40 AM »
Burger King going to Canada?
By Bernie Becker - 08/25/14 10:23 AM EDT
The fast food giant Burger King is discussing whether to buy Tim Hortons and reincorporate in Canada, a move that would slash its tax bill.


The merger would allow Burger King to relocate its corporate address to Canada and become perhaps the most well-known U.S. company to take advantage of a so-called inversion deal.

Such a move would increase the pressure on President Obama, who has suggested he would use his administrative powers to make inversions less appealing to companies if Congress doesn’t act to curb the deals.

Obama and Democrats have made the cross-border deals a part of their election-year message, believing it dovetails with their broader pitch on economic fairness. Treasury Department officials have said the agency is examining what steps the Obama administration could take on inversions, but a final decision could take weeks.

White House press secretary Josh Earnest declined to comment specifically on the proposed merger, but said the administration remained opposed to corporations inverting to avoid their U.S. tax obligations. A Treasury spokeswoman wouldn't comment on the possible deal, either.

Obama "doesn't believe that a company simply switching their citizenship, filling out a few papers to switch their citizenship to avoid paying their fair share in U.S. taxes is good policy," Earnest said. "It certainly isn't fair and it certainly isn't fair to the millions of middle-class families in this country that don't have that option."

Earnest said administration officials are reviewing ways the White House could take action without Congress to discourage inversions.

"They are considering a range of administrative options that are available to the administration to make those kinds of financial transactions less appealing to companies that may be considering them," he said.

The merger of Burger King and Tim Hortons, a Canadian chain known for its doughnuts and coffee, would create the third-largest fast food company in the world.

Burger King is discussing the inversion deal just weeks after another prominent retail chain, the pharmacy giant Walgreen, decided against reincorporating in Switzerland.

Walgreen, which still went through with the purchase of a European competitor, acknowledged that the potential consumer backlash played a role in its decision.

In recent weeks and months, leading pharmaceutical companies have followed through on inverting, after Pfizer jump-started Washington’s interest in the deals by trying to take over AstraZeneca. Almost 50 companies in all have reincorporated abroad in the last decade, according to the Congressional Research Service.

Congressional Democrats have sought legislation that would essentially make it impossible for a U.S. company to shift its address abroad if it merged with a smaller foreign competitor.

Democrats have also taken aim at the ability of those companies to get federal contracts and on the practice known as “earnings stripping,” which allows American subsidiaries to take tax deductions on interest payments following a loan from the foreign parent.

But any legislation is unlikely to gain much traction, which would put even more pressure on Obama to act. Republicans have generally said that companies will continue to have incentives to look offshore as long as the U.S. corporate tax rate remains at 35 percent.

GOP aides on Capitol Hill acknowledged that adding a prominent brand like Burger King would bring more attention to the cross-border deals. But they said they wanted to see more details about the possible merger before commenting on how much more pressure lawmakers would face on inversions.

A spokeswoman for Sen. Orrin Hatch (Utah), the ranking Republican on the Finance Committee, said he was willing to work with Democrats on a "viable policy-driven, apolitical proposal.”

"Burger King's pursuit of an inversion only further underscores the arcane, anti-competitive nature of the U.S. tax code," said the spokeswoman, Julia Lawless.

"Short of a tax overhaul that will make it easier for American companies to invest and create more jobs at home, Sen. Hatch has advocated for an interim proposal to address the disturbing recent uptick in inversions."

Canada’s top tax rate is 15 percent after being lowered a couple of years ago.

But a person with knowledge of the potential merger between Burger King and the Ontario-based Tim Hortons insisted that taxes weren’t the driving force behind the potential deal, which was first reported by The Wall Street Journal.

Burger King’s effective tax rate is already at 27 percent, the person said, and wouldn’t be lowered too significantly after other Canadian taxes were taken into account.

“This is not a tax play,” the person said. “Taxes don’t make a case for why you would do this.”

Instead, the two companies said in a statement that a deal would allow both chains to expand their reach both in North America and around the world.

Under the potential deal, Tim Hortons and Burger King would continue to operate as stand-alone chains, while sharing corporate services. The merged company would have more than 18,000 restaurants in more than 100 countries, with some $22 billion a year in sales.

This story was updated at 2:39 p.m.

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Offline xfreeper

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Re: Burger King going to Canada?
« Reply #1 on: August 26, 2014, 12:50:45 PM »
going ---------------------------------- gone

Offline Carling

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Re: Burger King going to Canada?
« Reply #2 on: August 26, 2014, 12:57:54 PM »
Warren Buffet's Berkshire is putting up $3b in cash to help facilitate this move.  Hypocrite.
« Last Edit: August 26, 2014, 12:58:58 PM by Carling »
Trump has created a cult and looks more and more like Hitler every day.

Offline truth_seeker

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Re: Burger King going to Canada?
« Reply #3 on: August 26, 2014, 01:36:36 PM »
This is almost identical to corporations moving from high tax rate locations like California, to low-no tax ones like Texas.

Bank of America moved from San Francisco to Charlotte. Fluor moved from Orange County, to Irving. Northrup Grumman moved from Los Angeles to Falls Church Virginia.

The international corporation I used to work for, avoided taxes by using opportunities such as Bermuda in the 1970s.

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