Will Burger King Pay A Price For Corporate Inversion?

27 Aug, 2014 by William Teach

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That’s what USA Today is discussing

Burger King is ruling a larger fast-food kingdom – and having to defend its move on social media.

The U.S.-based restaurant chain made it official Tuesday announcing that it agreed to merge with the Canada-based Tim Hortons restaurant chain. The deal, valued at about $11 billion, will create the world’s third-largest fast-food company, with about $23 billion in annual sales and more than 18,000 restaurants in 100 countries. (snip)

By midday several thousand comments had flooded Burger King’s Facebook page. On Twitter, #TimHortons was a trending topic with #BoycottBurgerKing and similar tweets numbering in the hundreds.

Burger King has “to get out in front” of any possible public boycott. “All of a sudden people on my Twitter and Facebook feeds are saying ‘Boycott Burger King,’ but don’t boycott (them) because these are small businesses that need the revenue, and Burger King is going to pay U.S. tax on those. They can’t shift those dollars out of the country.”

Regardless, Burger King may have a public affairs brouhaha cooking. Several members of Congress, including Sen. Dick Durbin, D-Ill., decried Burger King’s Canadian business move. In recent months, as more companies have used inversions, President Obama and Congress have publicly criticized the moves because they cut into U.S. tax revenue.

At the end of the day, will they really pay a price? No. You might get a few hardcore leftist wankers who will refuse to go there for a few months, but, this whole thing will be forgotten within a week. And, really

Tax and business planning attorney Paul Gilman of Chicago-based law firm Aronberg Goldgehn Davis & Garmisa expects that Burger King’s U.S. tax rate won’t change much “because they derive most of their income from franchisees, and (those in the U.S.) are still going to be subject to tax,” he said.

That’s right, most are franchises, so any boycott won’t hurt the company. Furthermore, this is not a full inversion, as BK will still keep a corporate office in the US. The hysteria is overblown, and what this really did was create a bigger company that allows for more growth for both BK and Tim Hortons, in the US, Canada, and internationally.

But, hey, if Lefties do not like it, perhaps they should push to make the US more competitive for the corporate tax rate.

Crossed at Pirate’s Cove. Follow me on Twitter @WilliamTeach.