Hold the pickle, hold the lettuce, Burger King’s corporate merger really upset us.
Well, Sen. Sherrod Brown, D-Cleveland, anyway. Down with the king, Brown said Sunday at the 20th annual Lorain County Organized Labor Day Family Celebration.
Brown was referring to last week’s $11.4 billion deal in which Burger King plans to buy Canadian doughnut chain Tim Hortons and to locate the combined company in Ontario, Canada. Brown said it is a tax dodge known as corporate inversion in which an American company combines with a smaller foreign company, then relocates its headquarters while keeping most of its operations in the U.S. allowing it to pay lower taxes.
Brown said Burger King benefits from food inspections, police protection and roads paid for by U.S. taxpayers, but won’t be paying its fair share of taxes due to the inversion. He urged the crowd to patronize locally owned restaurants instead of Burger King.
“They decided to renounce their American citizenship,” he said. “So why help them?”
Well done, sir, say inversion opponents like Sen. Carl Levin, D-Mich. But some say Brown doesn’t know what he’s talking aboot, er, about.
While Canadian corporate tax rates are lower than in the U.S., New York Times columnist Josh Barro wrote that the merger isn’t a good example of inversion. Tim Hortons had about $3.3 billion in revenue in 2013 compared to $1.1 billion for Burger King.
Barro also noted that while 44 percent of Burger King outlets are in the U.S., it has 21 percent in Canada and 35 percent elsewhere. Burger King has restaurants in 98 countries, according to its website.
While the combined company’s headquarters will be in Ontario, a Burger King news release said Burger King’s headquarters will remain in Miami.
“Burger King will continue to support and preserve its long-standing commitment to local communities and charitable causes in the United States,” the release said.
Barro said proposed laws to prevent inversions probably wouldn’t stop the merger, and the move wasn’t strictly to duck taxes.
“We can change the tax code, but we can’t prevent an American fast food company from going global,” Barro wrote.
Brown’s comments drew some cheers from crowd members, but criticism from an op-ed column in U.S. News and World Report on Wednesday. Writer Stephanie Slade accused Brown of hypocrisy, noting he supported a $260 million tax extension for Cleveland’s professional sports teams paid for by Cuyahoga County taxpayers.
“What does any of that have to do with Tim Hortons and Burger King? Simple: There’s hypocrisy in blasting one company for seeking out a more favorable tax climate while working to solidify tax giveaways for another,” Slade wrote. “If Brown wants to use social pressure to try to dissuade American businesses from moving overseas, more power to him. Better that than using the strong arm of the tax man to force lower-middle-class Americans to subsidize professional athletes and their ultra-rich team owners.”