Buffett defends Burger King deal

Billionaire investor Warren Buffett defended Burger King’s controversial merger with the Canadian chain Tim Hortons, insisting the deal wasn’t done to avoid U.S. taxes.

Buffett, appearing on MSNBC on Thursday, acknowledged that the Burger King-Tim Hortons deal was an inversion, the sort of cross-border merger that has drawn the ire of the White House in recent months.

{mosads}But unlike other recent deals, Buffett maintained taxes played a small role in Burger King’s merger with the Canadian doughnut chain.

“People say that Burger King is doing this to avoid federal taxes. The highest amount of federal tax that Burger King has paid in any of the last three years, the highest amount, has been $30 million. They are paying $11.8 billion for the acquisition,” Buffett said. 

“Now, if anybody would be paying $11.8 billion to save $30 million in federal income tax, they did not go to the math course that I went to,” he added.

On Capitol Hill, Republicans and Democrats remain deadlocked on how to deal with the recent influx of inversions, leaving the Obama administration on the cusp of taking executive action.

Democrats like Senate Majority Whip Dick Durbin (Ill.) have warned Burger King that it would lose customers because of its decision to shift its legal address to Canada.

But Buffett’s role in the deal — $3 billion worth of financing from his company Berkshire Hathaway — has blunted some of the criticism of the deal. Buffett is the namesake of President Obama’s “Buffett Rule,” which seeks to institute a minimum effective tax rate for the country’s highest earners.

Some Democrats have also said that Burger King’s merger isn’t as egregious as other recent deals. Buffett, for instance, noted that Tim Hortons earned twice as much as Burger King, and the deal would likely be unaffected by some Democratic proposals to curb inversions.

“The tax driven inversions usually have a bunch of trapped cash overseas, or they can transfer intellectual property or something of the sort,” Buffett said.

“Well, there isn’t a whole lot of intellectual property to transfer with hamburgers. I mean, it’s very hard to have transfer prices for hamburgers.”