Burger King, Warren Buffett under fire for Canadian inversion deal
Burger King Worldwide Inc. and billionaire investor Warren Buffett faced sharp criticism over plans that would create a new Canadian company after buying Tim Hortons Inc. to take advantage of Canada's lower corporate tax rates.
Burger King Worldwide Inc. and billionaire investor Warren Buffett faced sharp criticism over plans that would create a new Canadian company after buying Tim Hortons Inc. to take advantage of Canada's lower corporate tax rates.
Burger King said Tuesday it would pay $11.4 billion to buy the Canadian doughnut-and-coffee chain - with $3 billion in financing from Buffett's Berkshire Hathaway Inc. - and set up headquarters of the new company in Canada.
Sen. Sherrod Brown (D., Ohio) called for Americans to boycott Miami-based Burger King for the so-called inversion move to reduce its corporate taxes. And consumers posted negative comments on the company's Facebook page.
Buffett, who has backed an Obama administration plan named after him to force millionaires to pay the same share of their income in taxes as middle-class families, also came under fire.
In announcing the deal Tuesday to buy Tim Hortons, the companies said Berkshire Hathaway would receive preferred shares in the new company.
" 'Tax Me More' Warren Buffett To Finance Burger King's Tax Inversion Deal" was a headline on the economics and political website Zero Hedge.
"It has to be twisting the White House in messaging and political knots," said Chris Krueger, a Washington policy analyst with Guggenheim Securities.
Burger King and Buffett defended the deal, which is one of the largest and highest-profile tax inversions so far.
In the maneuver, which breaks no laws, a U.S. company buys a foreign competitor in a lower-tax nation and shifts its headquarters to that country. The Obama administration and some congressional Democrats have been pushing to limit tax inversions.
"This is not a tax-driven deal," said Alex Behring, who is Burger King's executive chairman and will hold the same position for the new combined company.
The combined federal, provincial, and local corporate tax rate in Canada is 26.3 percent, according to the Organization for Economic Cooperation and Development. The combined U.S. corporate rate is 39.1 percent.