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Burger King Merges with Tim Hortons, Left has a Meltdown

Burger King Merges with Tim Hortons, Left has a Meltdown

No word yet on whether or not we’ll be able to order chicken fries with a side of Tim Bits…

The world’s third-largest fast food chain is just a signature away from reality.

Burger King Worldwide, Inc. announced on Tuesday that it has made a deal to buy popular Canadian coffee chain Tim Hortons for a cool $11 billion. The decision to move the combined corporate headquarters to Canada, however, has left some questioning whether or not this is simply a tax-dodge masquerading as a corporate merger.

Predictably, the left is having a complete meltdown over the move, forcing Burger King to go on offense to defend their business decisions.

Via USA Today:

Burger King CEO Daniel Schwartz, who will become group CEO of the new company and handle day-to-day management, said that “the company is going to continue to be managed out of our Miami office.” “We are going to continue to pay U.S. taxes as we have been doing,” he said in a conference call with media after the deal’s announcement.

The deal was not about taxes, Schwartz said, noting that the corporate tax rate paid by Tim Hortons in Canada is in the mid-20s percentage-wise and Burger King’s “blended” tax rate it pays globally, including U.S. taxes, is also in the mid-20s. “So when we look at the combined company we don’t expect there to be meaningful lower or higher tax rates than we had before,” he said.

Instead, he said, “What is going to add value and drive growth for the long run is … more restaurants around the world and growing sales and profits.”

Twitter exploded this week with a resurgence of the “#BoycottBurgerKing” hashtag, prompting some scathing (and in some cases downright amusing) posts from the left:


Good to know.


Won’t somebody think of the chicken fries?!


More like flame broiled, amirite?!

The problem with the outrage (aside from its anti-capitalist, entitled roots,) is that its proponents are completely divorced from the reality of how Burger King runs its business. Burger King is a fast food chain that derives most of its revenue via its franchisees. Most of those franchises are located in the U.S. which means…wait for it…that they’ll still be paying the U.S. corporate tax rate.

Not that that matters, as far as the left is concerned. The fact that this merger was most likely motivated by the potential for growth opportunities, as opposed to about a 1% drop in overall effective tax rate, may be forever lost in the shuffle:

If being based in Canada is more favorable, from a tax perspective, one might expect Tim Hortons to have a lower effective tax rate than Burger King. But, in fact, the individual companies have similar effective tax rates, of about twenty-seven per cent. Also, the tax inversions that the government is trying to avoid tend to involve large companies acquiring much smaller foreign ones, largely for the tax benefit of moving their headquarters. But while Americans might assume that Burger King is much larger than Tim Hortons, it’s not. Before news of the talks emerged, Tim Hortons was worth about eight billion dollars and Burger King around nine billion dollars; the combined company will do a significant portion of its business in Canada.

According to the USA Today story mentioned above, following the merger announcement Tim Hortons stock soared, while Burger King’s fell by just over 4%. Burger King, however, is already out in front of the potential boycott, and has yet to back down from its argument that this business decision is both legal, and financially smart.

But even if Burger King was motivated by corporate tax concerns, why blame the company? At 39%, the United States imposes the highest corporate tax rate in the world, and Democrats in Washington have a plan in the works to advocate for a global minimum tax rate. This would prevent companies from moving their operations to tax havens, and ensure that the federal government continues to reap the benefits of increased rates.

At the end of the day, progressives are concerned about control: control over tax revenue, control over corporate organization, and control over the way Americans perceive smart capitalism. They’re willing to trade long-term growth that would benefit the shareholders of two major corporations for short-term political gain, even if that means standing behind attempts to sink an incredibly successful, lucrative corporate brand.

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Comments

I just hope Burger King doesn’t ruin Tim Horton’s.

I believe the tax advantages accrue such that the Canadian based company will only pay US corporate income tax on US earnings to the US Treasury. As a US based corporation it would pay US corporate income tax on earnings from not just the US but also from any other country in which they do business. Based in Canada they will pay tax to Canada on their Canadian income, tax to the US on their US income, etc. Blame the US tax laws which suck, not the corporation.

    Anyone wanting a longer winded version of the above wonderful summary is welcome to this link, which educated me on the issue earlier:

    http://www.bloombergview.com/articles/2014-08-26/burger-king-and-the-whopper-about-taxes

    Estragon in reply to laddy. | August 28, 2014 at 12:37 am

    Just so.

    And “inversion” is rarely used to avoid those double taxes on overseas operations. Most of the time, companies don’t repatriate the profits earned abroad, using them to fund foreign expansions instead.

    Ironically, the only companies facing the double taxation are those which bring those foreign earning back to invest in the USA. So the taxes serve to prevent companies from bringing home the profits, and taking a cut of what those who do can invest in our own country.

    Needless to say, Democrats love this stuff.

    Another Voice in reply to laddy. | August 28, 2014 at 1:22 am

    What do the lefts do to address the reality that the majority holder of Burger King is a Brazilian Investment group and financier Buffett is helping to close the merger with 25% of the required funding. Why do the progressives not want negotiate at the table for tax reform that is revenue neutral and keep both corporations 100% tax revenue “in house”. Isn’t the idea to retain money for reinvestment into our current declining infrastructure to grow the economy to benefit working Americans rather than to continue to grow entitlement programs which are sinking our ability to prosper.

      Don’t forget, that the Oracle of Obama (Buffet) of “tax us rich people more” demanded a higher dividend because he’d be paying more taxes on the deal. And he got it. That helps melt what little rocks are still remaining in the lefts head.

BK is an international company – Brazilian owned, as I tweeted earlier today:

https://twitter.com/WityCindy/status/504602305766100992

I am sure that most mainstream media companies just file a short form and do not have accounting departments staffed with tax attorneys and accountants to minimize their taxes and maximize their deductions.

THE ultimate…
and, by that, I mean
THE. F’ING. UL. TI. MATE. – GO F YOURSELVES
response is:

“But, *I* thought, according to YOU, *M*O*N*E*Y* was the root of all eeeeeeevil!”

…and let them STEW in THAT!

“…I’d like a left melt-down, cooked well, two slices of American cheese, with onion rings on top, please. And a delicious Collectivist Tears Of Rage shake, extra salty. Make it a double.

Heh!

The purpose of an inversion has never been, and never could be, and never will be, “ooh, Canada has a 15 percent tax rate, and the U.S. has a 35 percent tax rate, so we can save 20 points of taxes on all our income by moving.” Instead the main purpose is always: “If we’re incorporated in the U.S., we’ll pay 35 percent taxes on our income in the U.S. and Canada and Mexico and Ireland and Bermuda and the Cayman Islands, but if we’re incorporated in Canada, we’ll pay 35 percent on our income in the U.S. but 15 percent in Canada and 30 percent in Mexico and 12.5 percent in Ireland and zero percent in Bermuda and zero percent in the Cayman Islands.”
—Matt Levine

See? It was even worse than you thought. The U.S. is the only industrialized country that still does this.

the collective Left can not grasp the concept of “franchise”. They cannot wrap their feeble brains around a concept in which individuals own stores and pay a fee to use the name, images and methods created by someone else. With food franchises some consumables are purchased from the corp., some from corp. licensed suppliers and others locally.
These days many franchises are owned by minorities so a boycott against them hurts Blacks, Hispanics, Asians, and “Native” Americans.

It would be interesting to see the left’s reaction to a BK announcement that due to the coming boycott. it is recommending that its franchises preemptively lay off some employees and reduce others from full to part time, with the attendant reduction in benefit eligibility.

Quite frankly, if Burger King or any other corporation wants to move their operations due to outrageous US tax rates, I say let them.

Does the left no longer believe in freedom?

    Insufficiently Sensitive in reply to Paul. | August 27, 2014 at 11:23 pm

    Does the left no longer believe in freedom?

    Only for its own street theater, and transgressive legal thuggery as the IRS is now doing.

    Otherwise, the left never did believe in freedom – it’s ‘progressive’, where the anointed rule the subjects and hold two-minute hates for those who trespass against it.

The mid east is aflame. The agencies of our government created to work for the people have turned against the people. Thousands are crossing our borders illegally stressing local governments to the breaking point.

So…. let’s focus on a hamburger joint.

Insufficiently Sensitive | August 27, 2014 at 11:17 pm

condemn @burgerking for fleecing the United States.

Fleecing, hell. It’s the United States doing the fleecing. How?

First, charging that obscene 35% corporation income tax (higher than any other country), on income earned in the US – and on income earned in other counties too, for multinational earners.

Second, soaking that income a second time when the corporation pays dividends to shareholders. So for operating a successful business, the US, thanks to FDR’s far-left ‘brain trust’, punishes the capitalists twice.

The tax benefits for shifting the HQ to another country come from not having to pay that unjustifiable 35% corporate tax for earnings outside the US. Of course, the company does pay it for domestic earnings, which is already more than a ‘fair share’. And it pays whatever the going rate is for earnings in each other country it operates in.

The Obama/Democrat/media axis is demagoguing this issue beyond all reason, because the average voter doesn’t understand even the simple concepts above written.

TrooperJohnSmith | August 28, 2014 at 12:54 am

Since the “Burger King” is now a foreign monarch, let’s just hope Øbama doesn’t freakin’ bow to him the next time he gets a burger.

How ridiculously fickle can these immature little progressives be? Just a month or so ago, they were wetting themselves with glee over BK’s truly fab, I mean mahvelous, I mean, words simply can’t describe how wonderful, “rainbow whopper.” Now it’s back to the usual torches and pickforks.

(Pitchforks, that is.)

You guys have no idea. Most countries in the world do not tax their citizens who do not live there. The US does, although there are exemptions and credits and treaties. We still have to file, plus an extra form to prove our pension fund is not a money-laundering scheme.

And it doesn’t even help to give up your citizenship – according to the US – Israel tax treaty, the US can still tax me for another ten years. And that’s on top of taking a capital gains tax on my property if I do so.

By the way, do you realize that treaties typically are unratified?

When Burger King had the gay burger wrapper they were Progressive heroes. They were the most noble fast food business in Obama’s America. But now that they want to escape the draconian tax laws in Obama’s America they’re traitors. Now that they’ve decided to selfishly keep more of their money instead of letting the government have it they’re disgusting capitalist pigs, see?

Henry Hawkins | August 28, 2014 at 10:48 am

Since these corporations, like most individuals, follow tax laws to the lowest legal assessment, preferring to pay ounces rather than pounds of flesh to the IRS, well… we’re just gonna have to nationalize them.

From the Bloomberg article:

This is a great deal for the U.S. government, which gets to collect income tax even though it’s not providing the companies sewers or roads or courts or no-knock raids on their abodes.

Poetry, I tells ya, poetry

“Conservatives can’t claim they’re patriots if they refuse to condemn @burgerking for fleecing the United States.”

So trying to keep more of the money you earn is “fleecing” someone else and unpatriotic?

And they wonder why we think they’re insane.

“The recent push by Burger King to buy Tim Horton’s and move the combined headquarters to Canada to escape higher U.S. taxes is another example of the need to change the U.S. tax code,” Rep. Reed said. Thus Reed and Robertson are either both right or both wrong.
http://www.salamancapress.com/news/article_d61e0888-2f83-11e4-93d3-0019bb2963f4.html

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