Burger King could save millions on taxes

The fast food giant Burger King could escape more than $1 billion in taxes by shifting its headquarters to Canada, according to a new report from a liberal group. 

{mosads}Americans for Tax Fairness says that Burger King’s merger with Tim Hortons, the Canadian coffee and doughnut chain, could save the company anywhere from $400 million to $1.2 billion over the next four years.

Burger King and Tim Hortons’s deal is perhaps the most prominent of the recent wave of corporate “inversions,” in which many U.S. companies have sought to cut their tax bills through a cross-border merger. The two fast food companies are expected to finalize the deal Friday.

The White House and congressional Democrats have railed against inversion deals for much of this year, beginning when the pharmaceutical giant Pfizer tried to take over its British counterpart, AstraZeneca.

Burger King’s top brass have said since the deal was announced in August that the merger wasn’t driven by taxes, an idea backed by Warren Buffett, the billionaire investor and ally of President Obama’s who helped finance the merger. A spokesman told Reuters that the Americans for Tax Fairness study was “materially flawed.”

The study found that Burger King could save up to $820 million on capital gains taxes under the merger, another $275 million on future foreign earnings and $117 million on offshore profits.

Americans for Tax Fairness said “that tax considerations have played a major role in Burger King’s proposed corporate inversion, which would enable it to shed obligations to U.S. taxpayers, even as it benefits substantially from taxpayer support.”

Tax experts have said that they expect Burger King to get some tax benefits from the move, maintaining that Canada has a more favorable tax system for corporations than the U.S.

But even some Democrats on Capitol Hill have said that the deal isn’t as egregious as other inversions. Democratic proposals to curb the mergers, which seek to essentially bar companies from moving overseas for tax purposes by buying a smaller competitor, likely wouldn’t have affected the Burger King deal.

Still, the deal continues to reverberate in Congress. Antonio Weiss, Obama’s choice for a senior Treasury position, is running into opposition from Democrats because he was an adviser on the Burger King deal.