Burger King Dares Obama To Stop It From Fleeing To Canada

8/25/14
 
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from The Huffington Post,
8/25/14:

Burger King’s plan to scurry across the Canadian border to avoid U.S. taxes could be seen as the corporate equivalent of flipping President Barack Obama the bird.

The White House vowed earlier this month to use an executive order to curb tax inversions — deals in which U.S. companies buy smaller foreign firms in countries with lower taxes, then renounce their U.S. corporate citizenship and re-incorporate in that country.

Still, Burger King said late Sunday night that it was in talks to merge with Tim Hortons, Canada’s popular bakery and coffee chain. The new, combined company would be headquartered in Canada.

In a research note, Potomac Research Group political strategist Greg Valliere said Burger King’s move challenges regulators at the White House and Treasury to back up threats to crack down on inversions.

“So much for the theory that Treasury could chill future inversion deals by hinting of possible action,” Valliere wrote in the note. “We still don’t expect regulations to be finalized until early next year, after a deliberative comment period, but we think there’s a good chance that Treasury will get a phone call today from the White House, urging quicker action.”

Though the timing of the deal suggests a disregard for the Obama administration’s ability limit tax inversions, some say the company could be heading north before political pressure to close the tax loophole gives way to tangible legal changes.

“My sense is this is Burger King trying to dodge paying its taxes. I don’t know that I’d attribute it to their making a move like this to directly challenge Obama,” Frank Clemente, executive director of the nonprofit Americans for Tax Fairness, told The Huffington Post. “I can’t say what’s on the company’s mind here, whether they’re trying to beat the clock on this and do something before Congress passes legislation or do something before Obama signs an executive order.”

The past few years have seen American companies practically stampede to the border in an effort take advantage of lower rates elsewhere. The top U.S. corporate rate is 35 percent. In Ireland, for example, it is just 12.5 percent.

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