Burger King moves to Canada to avoid American Taxes

[eipstudios]

Burger King?s Move To Dodge American Taxes Not Going Over Well


Burger King?s plan to buy Canadian coffee chain Tim Horton?s and relocate over the border to reduce its U.S. tax liability isn?t going over well with some of the fast food store?s customers. Instead of the usual chatter on Burger King Facebook posts, recent updates on the company?s social media page have drawn dozens and dozens of angry comments relating to the merger and promising to boycott the company over its tax practices.

?If you become a tax cheat you can count my family of seven as former customers,? reads one post with 97 likes. ?If BURGER KING moves to Canada then US will boycott its restaurants,? says another that?s been liked over 700 times. The top comment on the store?s most recent post includes a promise to ?NEVER step foot in another Burger King again.? It has 1,251 likes as of this writing.

The prospective merger of Burger King and Tim Horton?s, which executives confirmed this morning and awaits only the approval of Canadian authorities, could go a long way to close the size gap between McDonald?s and the rest of the fast food industry. The merged company would be worth something north of $20 billion and could expect profits of over half a billion dollars annually ? still a far cry from McDonald?s $5.6 billion profit and more than $90 billion in net worth, but closer than any other chain.

While drug manufacturers and tech companies have made elaborate tax avoidance schemes a standard business practice over the past decades, companies like Burger King and Walgreen?s have a harder time staring down popular anger. Such Facebook ire is a long way from an organized boycott, but the possibility of concentrated consumer disaffection is one of several ways in which Burger King?s move is distinct from other recent ?inversion? mergers. The maneuver is getting more and more popular with tax consultants and executives who are looking for new ways to juice their stock prices, and Wall Street has raked in almost a billion dollars in fees from arranging the corporate marriages. But while many of the companies that have pondered or completed an inversion merger in recent years are household names, few are in the direct customer service role that a food store occupies.

While it remains to be seen what role the masses will play in Burger King?s fate, the move is putting two famous rich men at odds. Multibillionaire investor Warren Buffett is reportedly helping to finance the American burger chain?s Canadian donut acquisition. Mark Cuban, the outspoken Texas billionaire, made headlines earlier this summer for vowing to sell off shares of any company that conducts an ?inversion? deal. Deals like these are generally portrayed as benefiting shareholders and stock prices ? something that can draw negative attention when the shareholders who benefit from an inversion are members of Congress, like House Speaker John Boehner (R-OH) and Rep. Dave Camp (R-CA).

It will be interesting to see if investors line up behind either Cuban?s position or Buffett?s endorsement of the tactic. But assuming the merger goes through, neither of those two men will have very much influence over what life is like at the new King Horton?s. Instead, the Brazilian private equity group 3G Capital will likely rule on even the most minute details of work at the new company. 3G owns Burger King now and is credited with reviving the company?s sagging profitability largerly by trimming costs. Employees aren?t allowed to use minifridges or color ink for printing (unless it?s a document for someone outside the office), and the company?s philosophy for its commercial empire is known as PSD for the three qualities it wants in new hires: ?poor, smart, deep desire to get rich.?

But no matter how lean the new Brazilian bosses manage to render the new chain, simply streamlining the current operations won?t solve the larger problem facing the fast food industry. Young customers are turning away from fast food stores to shop instead at so-called ?fast casual? food spots like Chipotle or Five Guys. There is more and more scrutiny of the industry?s reliance on low wages, quiet government subsidies through the public assistance programs that keep their full-time workers from starving, and out-and-out wage theft. Strikes and other worker organizing efforts have spread from New York City to hundreds of cities and towns in every part of the U.S. since late 2012, and workers are vowing to raise the stakes in future demonstrations. The current model may be great for executives, who are paid 1,200 times more than their front-line workers, but it seems increasingly unsustainable over the long haul.

[Best-In-BC]

Things Getting That Bad ?

[brentbacardi]

As long as its legal they aren't a tax cheat. I wish I could avoid more taxes than I already do. I don't think anyone should feel bad for paying the least amount of tax possible. Even if they did something illegal I wouldn't hold it against them because in my opinion its not unethical to break laws that shouldn't be there in the first place. ie doing drugs, skipping on taxes, prostitution...

[MiamiBoyz]

Good for them! I hope Microsoft and Apple follow them.

[DraX]

Originally Posted by MiamiBoyz

Good for them! I hope Microsoft and Apple follow them.

No I hope all companies and individuals follow them. Game over!

[SilentKnight]

3G Capital bought Heinz in 2013 and promptly closed the Heinz ketchup factory in Leamington, Ontario that had operated over 100 years (since 1909). 740 employees and at least 250 local farmers were suddenly out of work.

Now 3G Capital (Warren Buffet/Jorge Lemann) - after the acquisition of Tim Hortons...wants to re-locate their Burger King headquarters in Canada to gain tax breaks.

3G Capital - such a nice Canadian-friendly corporation.




I wonder how many people in Leamington, Ont. will be eating at Burger King anytime soon.

Probably not many.

[SmutHammer]

Originally Posted by MiamiBoyz

Good for them! I hope Microsoft and Apple follow them.

G.E. is the one I wish would move. to many people hating on that company in America. All major business should follow. Teach the people that when they go after the 1% they screw themselves.

[DBS.US]

I try to support U.S companies when I can. If Burger King moves to Canada to avoid paying U.S. taxes I will not spend my money there.

[SmutHammer]

Originally Posted by DBS.US

I try to support U.S companies when I can. If Burger King moves to Canada to avoid paying U.S. taxes I will not spend my money there.

I will. Until the Government stops punishing people for being successful.

[Biggy]

Originally Posted by Ed Hammer

I will. Until the Government stops punishing people for being successful.

Agreed. Why are we empowering our government? They are like a charity with 90% administrative costs.

On the flipside, Burger King (and all American companies) can do nothing, have a competitive disadvantage against other international businesses with lower tax rates, and lose business to them over time, in which case Americans will suffer even more long term. I can't blame companies for simply wanting to compete and remain competitive, and the name of the game is after-tax cash and having a war chest.

All that extra money they're going to save is good for the shareholders, it can be used to build new business or acquire more businesses. And isn't this funny how Warren Buffet is partially behind it? Actions speak louder than words.

[Jman]

Canadia.... Fuck yeah!!!! ;)

[BlackCrayon]

i always thought american corps paid less than canadian...guess not.

[Rochard]

This is why I am all for a flat tax. Not sure about any of you, but I do my best to write off anything I can.

[Barry-xlovecam]

http://www.businessinsider.com/burge...ion-law-2014-8

Tax Inversion Incentives may be outlawed ...
For every action, there is an equal and opposite reaction ... Newton's Third Law of Motion

[mineistaken]

Originally Posted by Ed Hammer

I will. Until the Government stops punishing people for being successful.

Thing is that 47% rabble is higher in numbers so the trend should only continue..

[L-Pink]

Originally Posted by Biggy

Agreed. Why are we empowering our government? They are like a charity with 90% administrative costs.

On the flipside, Burger King (and all American companies) can do nothing, have a competitive disadvantage against other international businesses with lower tax rates, and lose business to them over time, in which case Americans will suffer even more long term. I can't blame companies for simply wanting to compete and remain competitive, and the name of the game is after-tax cash and having a war chest.

All that extra money they're going to save is good for the shareholders, it can be used to build new business or acquire more businesses. And isn't this funny how Warren Buffet is partially behind it? Actions speak louder than words.

[Frank]

Same here..

Originally Posted by BlackCrayon

i always thought american corps paid less than canadian...guess not.

[Captain Kawaii]

People should be more worried about what BK puts into its food. Warren Buffet is laughing all the way to the bank.

[brassmonkey]

Originally Posted by Best-In-BC

Things Getting That Bad ?

the taxes were like lotto winnings taxes wanna pay it?

[baddog]

Originally Posted by BlackCrayon

i always thought american corps paid less than canadian...guess not.

I heard it was 15% vs 35% - I could not tell you what year was the last time I was in a Burger King (might have used the bathroom on a road trip sometime), but as Canada is under a monarchy I think this makes total sense.

[Jman]

LMAO from Burger King to Monarchy... damn good thread ;)

[CDSmith]

For years Americans on this and other forums have been telling me how much higher my taxes are than theirs, and thus how they wouldn't want to live here even if we have "free" healthcare.

They're all now learning that at least for businesses and business owners (such as myself) the taxes here in Canuckiaville are actually lower than what they're paying.

Like I said.


Oh yes, and free healthcare. :D

[brassmonkey]

Originally Posted by Jman

LMAO from Burger King to Monarchy... damn good thread ;)

you eat boogerking??

[Phoenix]

Another whopper tuesday mega deal..buy one whopper get one free will get all those customers back.

[Due]

It's not going to make a difference, in Denmark the Danish version of the fda issued s statement at one point saying that burgers from burger king might increase hour chances of getting cancer because of the high temperature they grill the meat with. Didn't make a difference...

People will talk but at the end of the day it will make little difference add burger king and other fast food places is all about how people can't control their impulses..

[SilentKnight]

I never eat at Burger Slop - and other than the occasional small cup with a co-worker on break, I don't drink much Tim Hortons coffee, either. The rest of their products are over-priced and small portions. Tim Hortons has gone way downhill ever since Wendys bought them out years ago.

Coffee Culture (in my area) has a far superior coffee - for the same price.

I could care less about the buy-out.

[Sly]

Originally Posted by CDSmith

For years Americans on this and other forums have been telling me how much higher my taxes are than theirs, and thus how they wouldn't want to live here even if we have "free" healthcare.

They're all now learning that at least for businesses and business owners (such as myself) the taxes here in Canuckiaville are actually lower than what they're paying.

Like I said.


Oh yes, and free healthcare. :D

There's a difference between corporate and personal taxes. The United States has some of the highest corporate taxes in the world and it's been like that for quite some time. Anybody that told you otherwise didn't know what they were talking about or you are merging two different things; corporate taxes and personal taxes.

Feel free to read more: http://www.forbes.com/pictures/fidj4...ister-tax-man/

[hottoddy]

If you tax them, they will leave.

Yay, libs!

[Seth Manson]

I dont eat there so it doesnt bother me. But I seriously doubt that the line to their drive-thru window is going to be empty over this.

[SmutHammer]

Things have changed a lot in the last 5 years. The other day I was driving through a I wouldn't say rich, but maybe upper middle class neighborhood and there was an unusual amount of houses for sale. My friend pointed it out questioning why.... It's makes perfect sense to me. These are the people suffering most from the changes made in the last 5 years and they can no longer afford to maintain their old lifestyles.

The USA is not what it once was....

[SilentKnight]

Originally Posted by Ed Hammer

Things have changed a lot in the last 5 years. The other day I was driving through a I wouldn't say rich, but maybe upper middle class neighborhood and there was an unusual amount of houses for sale. My friend pointed it out questioning why.... It's makes perfect sense to me. These are the people suffering most from the changes made in the last 5 years and they can no longer afford to maintain their old lifestyles.

The USA is not what it once was....

And yet, in parts of Canada I'm still seeing construction on monster homes with mega sq. footage - in quite a few areas. The stretch of Niagara River from the Falls to Fort Erie has seen several new monster homes in the last few years...and in an area of severe economic hardship - they really stand out on the landscape - sort of like beacons of hope for things to soon turn out.

[theking]

Burger King spokesman have stated that they will keep its headquarters in the U.S. and will continue to pay taxes in the U.S.

But because of a loophole in the Corporate Tax law some are saying they may apply the loophole in order to pay Canada's reduced Corporate Tax rate...though they are apparently denying that they are going to do that.

[directfiesta]

Originally Posted by baddog

I heard it was 15% vs 35% - I could not tell you what year was the last time I was in a Burger King (might have used the bathroom on a road trip sometime), but as Canada is under a monarchy I think this makes total sense.

makes a perfect couple :


BTW, the only one still in that monarchy thing is Steven Harper

[baddog]

http://www.royal.gov.uk/MonarchAndCo...einCanada.aspx

[eipstudios]

[Socks]

http://www.bloomberg.com/news/2014-0...-calculus.html

Billionaire Warren Buffett was an ally of President Barack Obama during the 2008 presidential campaign and the force behind Obama?s ?Buffett Rule,? designed to increase tax bills for the wealthiest Americans.

Now, the second-richest man in the U.S. has dented Obama?s effort to stamp out corporate inversions.

Buffett?s financing of Burger King Worldwide Inc. (BKW)?s $11.4 billion purchase of the Canadian fast-food chain Tim Hortons Inc. (THI) challenges Obama?s argument that inversions are unpatriotic and gives defenders of the practice leverage to make their case.

?Warren Buffett has nothing to be defensive about -- this looks like a smart investment that should benefit his shareholders,? said Tony Fratto, a Treasury Department and White House official in President George W. Bush?s administration. ?As for the White House and Treasury, I hope they learn something here.?

The lesson, business advocates say, is twofold: Such deals that move companies? addresses out of the U.S. are often about bigger long-term profits, not just the tax benefits Washington focuses on, and attempts to pressure markets by shaming companies are misguided.

Burger King Chief Executive Officer Daniel Schwartz framed the tax effect as minimal and peripheral -- not central -- to his company?s decision to merge and put the combined company?s address in Canada.

?We don?t expect our tax rate to change materially,? Schwartz said on a call with investors yesterday. ?This transaction is not really about tax. It?s about growth.?

Assumptions Tested

A White House official, who requested anonymity to discuss policy still being formulated, said the administration won?t comment on specific deals and remains committed to its proposal for a revamp of the tax code and a crackdown on inversions.

The Burger King deal tests the long-held assumption of anti-inversion activists that the American public and politicians wouldn?t stand for a name-brand, consumer-facing company moving its headquarters across the U.S. border to pay a lower tax rate.

When Walgreen Co. (WAG) decided earlier this month not to enter a deal that would have inverted its corporate structure, Democrats touted the move as evidence that companies wouldn?t risk the wrath of consumers.

The danger for Democrats is that Buffett?s investment in the burger-fries-and-a-Coke company?s inversion might flip that calculation and make it politically easier for other corporations to follow suit without suffering repudiation from the public or the White House.

Unofficial Adviser

That?s because Buffett in the past has served as a sort of unofficial adviser to Obama on business and financial matters, someone whose stamp of approval has offered political cover when the president has been accused of being anti-business or of unfairly targeting the wealthy. It was Buffett, after all, who supported Obama?s call for tax code changes by saying that he paid a lower tax rate than his secretary.

If Obama were to question the Burger King deal publicly now, it would mean putting himself at odds with Buffett.

Berkshire Hathaway Inc. (BRK/A), where Buffett is chairman, CEO and the largest shareholder, committed $3 billion of preferred equity financing, according to a statement. Omaha, Nebraska-based Berkshire, which also owns the Dairy Queen restaurant chain, won?t participate in managing the restaurant business under the deal. It will get a 9 percent annual dividend, which would be taxable income for Berkshire.

Reducing Taxes

As an investor, Berkshire wouldn?t benefit directly from any tax savings at Burger King. Even so, Buffett has a long track record of working to reduce corporate taxes at his company, including a transaction earlier this year with Graham Holdings Co. (GHC) He said at the company?s annual meeting in May that Berkshire doesn?t ?add a tip? when it pays its tax bill.

Later that month, Buffett addressed drugmaker Pfizer Inc.?s bid for London-based AstraZeneca Plc, an offer that was subsequently abandoned.

?I?m not saying they?re doing anything illegal at all in following the rules on inversion,? Buffett told CNBC, according to a transcript on the business news network?s website. ?I would personally change that part of the law. And other people might change the part of the law about wind tax credits, but I?m not attacking Pfizer for following the U.S. tax law.?

Buffett didn?t respond yesterday to a request for comment sent to an assistant.

?Berkshire?s Money?

Burger King pays less than the U.S. corporate tax rate because it operates in many jurisdictions. Its effective rate in 2013 was 27.5 percent, one percentage point higher than the Canadian corporate tax rate of 26.5 percent.

Buffett ?tends to do what?s best for his money,? Jeff Matthews, a Berkshire shareholder and author of books about the company said yesterday on Bloomberg Radio. ?And, in this case, what?s best for Berkshire?s money is getting involved in this deal.?

The White House response to the Burger King deal has been muted compared to Obama?s aggressive rhetoric on inversions in general.

?I proposed closing this unpatriotic tax loophole for good,? Obama said in his weekly address on July 26. ?Rather than double-down on the top-down economics that let a fortunate few play by their own rules, let?s embrace an economic patriotism that says we rise or fall together, as one nation, and as one people. Let?s reward the hard work of ordinary Americans who play by the rules.?

?Bermuda Loophole?

White House Press Secretary Josh Earnest said Aug. 25 that Obama wants Congress to act and that the administration is looking for ways to discourage inversions. He said he wouldn?t comment any specific deals, including Burger King.

Democratic National Committee Vice Chair Donna Brazile wasn?t so restrained.

?Sellouts! Now Burger King abandons USA to avoid paying taxes like the rest of us. A Whopper of a scam,? Brazile wrote on Twitter. Her post linked to an online petition opposing the inversion.

For more than a decade, advocates for closing what was once called the ?Bermuda loophole? made little progress. The political terrain began to shift this year, with mainstream Democrats and a handful of Republicans picking up on a populist issue that had once been a hobby horse for a few U.S. lawmakers, including Senator Charles Grassley, an Iowa Republican, and a pair of Michigan Democrats, Senator Carl Levin and his brother Representative Sander Levin.

?Perverse Effect?

On July 10, Representative Rosa DeLauro, a Connecticut Democrat, won a House roll-call vote on an amendment that would ban some inverted companies from securing U.S. government contracts. Thirty-four Republicans, including Michigan Representative Dave Camp, the pro-business chairman of the tax-writing Ways and Means Committee, voted with her, while only six of her fellow Democrats voted ?no.?

In a July 27 Washington Post op-ed, Treasury Secretary Jacob J. Lew called on Congress to pass a law requiring that foreign shareholders account for 50 percent of the ownership of a new merger between a U.S. company and a foreign one -- up from the existing 20 percent threshold. The administration wants that change made retroactive to May.

?The alternative -- legislation taking effect after the president signs it into law -- could have the perverse effect of encouraging corporations to act more quickly, negotiate new deals and rush to close those transactions before the bill is enacted,? Lew wrote. ?It would be a mistake for Congress to pass anti-inversion legislation that creates a race against the clock and encourages more, not fewer, inversions.?

[mopek1]

Damn socialist Canada!

Oh wait ...

[nico-t]

what the fuck do the customers care? What a bunch of fucking morons.

[slapass]

Originally Posted by Ed Hammer

Things have changed a lot in the last 5 years. The other day I was driving through a I wouldn't say rich, but maybe upper middle class neighborhood and there was an unusual amount of houses for sale. My friend pointed it out questioning why.... It's makes perfect sense to me. These are the people suffering most from the changes made in the last 5 years and they can no longer afford to maintain their old lifestyles.

The USA is not what it once was....

You fucking kidding with this? 5 years ago half of those same houses were empty. The reason you are seeing some up for sale, is they can finally afford to sell and move out or up.

Anyone else notice that they have to pay 9% interest on the loan to do this deal? That has got to be a junk bond rate. Expect to see them use whatever tax break they can get to make this deal work as it is being viewed as a long shot.

[czarina]

That's the right thing to do. If the government is choking you with taxes, and there is a legal way to get out of the choke, why not? What are we, otherwise, sheep, that have to do what the shepherd wants us to do?

[PR_Glen]

This would be the first time in history that anyone came to Canada to avoid taxes..

ps: it's whopper wednesday...bitches

Originally Posted by baddog

I heard it was 15% vs 35% - I could not tell you what year was the last time I was in a Burger King (might have used the bathroom on a road trip sometime), but as Canada is under a monarchy I think this makes total sense.

Jesus, you really are out of touch man.. We haven't been 'under a monarchy' since 1867...

Originally Posted by baddog

http://www.royal.gov.uk/MonarchAndCo...einCanada.aspx

Now read that article and it will become quite clear...

[nico-t]

Originally Posted by PR_Glen

This would be the first time in history that anyone came to Canada to avoid taxes..

ps: it's whopper wednesday...bitches





Jesus, you really are out of touch man.. We haven't been 'under a monarchy' since 1867...



Now read that article and it will become quite clear...

this is why baddog normally prefers to reply in short, cryptic, suggestive and annoying sentences

[Bryan G]

Originally Posted by baddog

I heard it was 15% vs 35% - I could not tell you what year was the last time I was in a Burger King (might have used the bathroom on a road trip sometime), but as Canada is under a monarchy I think this makes total sense.

[tony286]

Originally Posted by Ed Hammer

I will. Until the Government stops punishing people for being successful.

Really? In 1950 over one third of gov rev came from business taxes, now its 10 percent and they are making more than ever.

[AmeliaG]

Originally Posted by Ed Hammer

Things have changed a lot in the last 5 years. The other day I was driving through a I wouldn't say rich, but maybe upper middle class neighborhood and there was an unusual amount of houses for sale. My friend pointed it out questioning why.... It's makes perfect sense to me. These are the people suffering most from the changes made in the last 5 years and they can no longer afford to maintain their old lifestyles.

The USA is not what it once was....

Very true. The 1% are just fine, but the economic climate is hitting middle class families very hard.

[Tom_PM]

TIP: ALWAYS drive past every fast food place and go to the grocery store instead. They have prepared food for you and placed it in long aisles based on niche. yw

[iSpyCams]

http://money.cnn.com/2014/08/26/news...html?hpt=hp_t4

"We don't expect there to be meaningful tax savings," said Daniel Schwartz, CEO of Burger King Worldwide. "This transaction is not about tax rates, but about growth."

Burger King (BKW) has arranged for $12.5 billion in financing to complete the deal, with $3 billion of that coming from Warren Buffett's Berkshire Hathaway (BRKA). Berkshire is only providing financing and will have no management role in the combined company.
Berkshire will have to pay a tax rate more than twice as high on the preferred dividends it receives as payment of that debt because it is coming from a foreign company, rather than a U.S. company, a source with knowledge of the deal told CNN. That raises the cost of financing.

So, no tax savings and Berkshire paying double tax on the interest for the loan. I don't give a shit about Canada, Burger King or avoiding taxes (legally) I think it's everyone's responsibility to pay as little taxes as they legally can, just like with a light bill or water bill, waste is wrong.

I just think it's strange nobody is looking at the facts here.

[Mutt]

Small business owners, professionals, workers can't avoid paying taxes, no reason corporations should be able to.

What's the benefit to a country when your biggest companies do anything to avoid paying taxes and produce their products offshore using slave labor?

I'd love to hear what these corporations feel a fair tax rate would be. Put them on the spot. Of course they'd lie, they wouldn't have the balls to say what they really think and that would be they don't think they should pay any taxes, trickle down economics which is a fallacy.

Super wealthy crybabies - here's what their corporate predecessors paid.

The United States' corporate tax rate was at its highest, 52.8 percent, in 1968 and 1969.

[pornguy]

Going from 34 to 15% tax will allow them to pay the burger flippers 12$ an hour and not take a hit on income.

[Tom_PM]

Originally Posted by Mutt

Small business owners, professionals, workers can't avoid paying taxes, no reason corporations should be able to.

What's the benefit to a country when your biggest companies do anything to avoid paying taxes and produce their products offshore using slave labor?

I'd love to hear what these corporations feel a fair tax rate would be. Put them on the spot. Of course they'd lie, they wouldn't have the balls to say what they really think and that would be they don't think they should pay any taxes, trickle down economics which is a fallacy.

Super wealthy crybabies - here's what their corporate predecessors paid.

The United States' corporate tax rate was at its highest, 52.8 percent, in 1968 and 1969.

Don't confuse people with charts showing facts. sa matta wit u