Burger King Rebels Against Obama Administration: Tax Evasion or Smart Thinking?

The King Of Burgers is Changing Kingdoms

The restaurant chain known as “Burger King” may be renouncing its American citizenship and moving to Canada, and it’s all in direct rebellion of the White House and policies of the Obama Administration.

According to a report from the Huffington Post, “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, or 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.”

Burger King Canada

A Presidential Challenge?

This move could be seen as a challenge by Burger King, calling Obama’s bluff on his threat to use executive order to stop companies from moving to other countries in order to avoid the huge taxes that the US has. It is also possible that Burger King fully believes that Obama will sign the executive order, and is moving quickly to avoid being caught in that trap. Either way, Burger King isn’t alone. In the last two years, as many as twenty-one American companies have chosen to leave the country in order to get a tax break. Since the early 80s, as many as seventy Americans companies have fled the border. The top corporate tax in the US is 39.1%, according to the Washington Post. It is the highest of any country. Japan comes in second at 37%, while Ireland is last at only 12.5%. Canada sits at 26.3%.

Shares Spike After Talks of Merger

The Chicago Tribune explains, “The deal would be structured as a tax inversion, which could see a more favorable treatment for Burger King’s foreign profits and create the third-largest global quick-service restaurant player .” The Tribune also reports that both Tim Horton’s and Burger King have enjoyed spikes in their shares after the news got out that they were in talks about a merger. On the New York Stock exchange, Tim Horton’s shares were up almost 20%, and Burger Kings were up over 17%.

Many Frown on the King for Jumping Ship

Not everyone is happy about Burger King skipping town. According to The Blaze, White House Press Secretary Josh Earnest stated, “The president doesn’t believe that a company simply switching their citizenship to avoid paying their fair share in U.S. taxes is good policy. It certainly isn’t fair to the millions of middle class families in this country that don’t have that option. The reason it’s not fair – again – not speaking about any transaction [in particular] – the reason it’s not fair that companies that would consider an inversion continue to benefit from all of the resources of the United States, the United States government and other assets that are funded by taxpayer dollars. So companies that are based in the U.S. continue to benefit from the infrastructure that we have in this country.” Some citizens agree.

Not only is the Obama Administration in a tizzy, but Burger King is also facing flack from the public over its decision. As Huffington Post explains,”Burger King is getting whopped over its plan to avoid U.S. taxes by fleeing to Canada. People flooded the fast-food chain’s Facebook page on Monday with threats of a boycott after the company announced talks to merge with Canadian coffee and doughnut chain Tim Hortons. ‘Move to Canada to avoid paying taxes and I will never darken the door of a Burger King again,’ Mike Gee, of Magnolia, Arkansas, wrote in a comment. ‘Does corporate greed in this country ever end?'” Burger King is not alone.

Walgreens Backs Out to Appease Public

In April, Walgreens was thinking of relocating to Europe to avoid the burden of US taxes. Public outcry was so loud, however, that the CEO decided leaving was not in the company’s best interest. According to the Chicago Tribune “Walgreen’s decision to maintain its tax domicile in the United States ends months of speculation and a steady drumbeat of criticism of the company from activists, unions and politicians, including President Barack Obama, for considering moving its headquarters overseas. Public backlash to Walgreen weighing reincorporating either in the United Kingdom or Switzerland played a role in its decision to remain in the U.S., Walgreen said.”

So which is it? Do you think it’s fair for corporations to leave the US in order to avoid huge taxes? Or do you see it as a triumphant way for them to get back at a government gone bad? Is this the Boston Tea party, only bigger? You decide. Comments welcome below.