Openly Royalist Burger Chain Becomes Canadian Citizen

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Photo: Timothy A. Clary/AFP/Getty Images

The big, fat, greasy business news today is that Burger King and Tim Hortons are merging in a controversial “tax inversion” deal.

All-American Burger King is acquiring the Canadian coffee-and-doughnuts chain for about $11.4 billion. But the two fast-food giants’ new corporate parent will be located north of the border — meaning it will pay Canadian tax rates, not American ones.

Analysts have said the deal might not actually reduce Burger King's tax bill by much. The motivation is to get a toehold in the hard-to-crack breakfast market, and the move seems designed to appease Canadian regulators potentially concerned about an iconic national brand being subsumed by a foreign corporation.

The companies themselves were also quick to swat down the idea that they were bilking Uncle Sam on Tuesday. “We hear you. We’re not moving, we’re just growing and finding ways to serve you better,” Burger King said on its Facebook page. The deal “is not tax-driven — it’s about global growth for both brands. BKC will continue to pay all of our federal, state and local U.S. taxes.” It added: “The WHOPPER isn’t going anywhere.”

But an inversion is an inversion is an inversion, whatever the motivation. (Sample Facebook comment: “Not believing it. The CNN article indicates that you plan to ‘base yourselves’ in Canada. That's a headquarters, people. #BurgerKingTaxCheats.") And inversions have become the subject of tremendous political scrutiny this year, with numerous members of Congress lashing out and the Obama administration looking to crack down.

“Burger King’s decision to abandon the United States means consumers should turn to Wendy’s Old Fashioned Hamburgers or White Castle sliders,” said Senator Sherrod Brown in a statement. “Burger King has always said ‘Have it Your Way.’ Well, my way is to support two Ohio companies that haven’t abandoned their country or customers.” 

But consumer boycotts are notoriously spotty, and the Obama administration can only do so much. The real question is whether the drumbeat of high-profile corporate expatriations will convince Congress to tackle tax reform. There’s bipartisan agreement on the need to stop companies from inverting. There are even a few plans for politicians to get behind. But there are precious few legislative days left before the election — and there’s certainly no bipartisan agreement on a broader corporate tax reform plan.

That means, dollars to doughnuts, Burger King need not worry too much about Washington’s interference for now.