Ithaca, N.Y. — A local Congressional candidate is calling Burger King “unpatriotic” for seeking a corporate merger with the Canadian company Tim Hortons that some have called a tax dodge.
Martha Robertson — the Democratic candidate for the 23rd Congressional District, which includes Ithaca — said in a statement that Burger King is hoping to acquire Tim Hortons to “avoid paying American corporate taxes.”
“Burger King would effectively cheat taxpayers out of taxes on profits made from American consumers,” said Robertson, who is hoping to unseat Rep. Tom Reed.
“…Burger King is an American company, and it’s downright unpatriotic for them to abandon the country that allowed them to succeed in the first place.”
The statement from Robertson comes as national commentators debate Burger King’s pursuit of Tim Hortons.
Critics say that Burger King’s decision amounts to a “tax inversion,” explained clearly here by Vox’s Matt Yglesias:
“What is a tax inversion?
…Different countries tax corporate profits in different ways and at different rates. So a company whose business is subject to relatively heavy taxation in one country (say, the United States) can buy a smaller company located in a country where its business is taxed at a lower rate (say, Ireland) and then declare the merged entity to be domiciled in the low-tax country for the purposes of taxation.”
But Burger King has said the deal is not about taxes.
The Wall Street Journal reports:
“This is not a tax-driven deal,” Alex Behring, Burger King’s chairman and co-founder of 3G Capital, said Tuesday. “It is fundamentally about growth and creating value through accelerated expansion.”
The LA Times also provided evidence that Burger King’s move was not about taxes:
“Burger King’s overall effective tax rate in 2013 was 27.5%, according to its annual report. Tim Hortons effective tax rate for the same year was 26.8%.
… Burger King’s effective tax rate is roughly consistent with the Canadian tax rates.
“We don’t expect our tax rate to change materially,” (the Burger King official) said.
That hasn’t stopped many politicians on the left, not just Robertson, from criticizing the company.
Sen. Bernie Sanders, I-Vermont, has been an outspoken critic on tax loopholes, like tax inversion, a loophole that Burger King may benefit from if it merges with Canadian doughnut chain Tim Hortons and moves its base to Canada.
“Many of these corporations have absolutely no loyalty to the people of the United States or to our government.”
And the Chicago Tribune:
“Sen. Dick Durbin is taking aim at Burger King, telling supporters today the fast-food giant is headed for Canada to avoid paying U.S. taxes.
“Burger King told us they were proud to be in America, but now we know that was a whopper,” he emailed supporters.
Do you have thoughts on Roberton’s criticism? Drop a note in the comments section.