Burger King’s Move Draws Controversy

Getty Images(NEW YORK) — Burger King is facing a grilling from critics of U.S. companies that move overseas to cut their tax bills.

“I’ve eaten my last Whopper,” is among the many comments on Burger King’s Facebook page.

The company announced on Tuesday that it would buy the popular Canadian coffee and doughnut chain Tim Hortons for more than $11 billion. The corporate headquarters of the combined firm will be in Canada — a move that stands to help lower Burger King’s corporate taxes.

Sen. Sherrod Brown, D-Ohio, is calling for U.S. consumers to boycott Burger King, while Democrats have been calling for legislation to limit these so-called tax inversions.

But the CEO of the merged company insists the deal is not about taxes. And there appear to be strong business reasons for the firm to move. While Burger King has many more franchises, Tim Hortons has much larger profits than the U.S. firm. The deal will create the world’s third largest fast-food chain.

Burger King’s move has re-ignited the debate over the U.S. corporate tax system. This is not merely about tax rates but also the global system of taxation.

“The U.S., unlike most developed-world governments, insists on taxing the global income of its citizens and corporations that have U.S. headquarters,” writes Megan McArdle of Bloomberg Businessweek. “Because the U.S. has some of the highest tax rates in the world, especially on corporate income, this amounts to demanding that everyone who got their start here owes us taxes, forever, on anything they earn abroad.”

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