This week, Burger King announced that it is buying the Canadian chain Tim Horton's — and relocating its headquarters to Canada, a move that could lower its corporate taxes. According to accounting firm KPMG, total tax costs in Canada are 46.4% lower than in the US.
Burger King isn't the first corporation to pursue this strategy, known as "tax inversion." Walgreens recently abandoned plans to pursue a tax inversion after negative publicity. Already, Burger King is receiving some angry responses. Senator Sherrod Brown (D-OH) released a statement calling people to boycott Burger King:
"Burger King’s decision to abandon the United States means consumers should turn to Wendy's Old Fashioned Hamburgers or White Castle sliders," Brown said. "Burger King has always said 'Have it Your Way'; well my way is to support two Ohio companies that haven’t abandoned their country or customers." Wendy's is based in Dublin, Ohio, while White Castle is headquartered in Columbus.
Related Bills
Members of Congress have introduced proposals related to corporate taxes and inversions:
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HR 4679
(S 2360 in Senate) "Increases the needed percentage change in stock ownership from 20 percent to 50 percent and provides that the merged company will nevertheless continue to be treated as a domestic US company for tax purposes if management and control of the merged company remains in the US and either 25 percent of its employees or sales or assets are located in the US," according to bill sponsors. "Under current law, the merged company is treated as a foreign company if more than 20 percent of the stock of the merged company is owned by stockholders who were not stockholders of the US company or if the merged company has at least 25 percent of its employees, sales and assets where it is incorporated."
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S 250
Corporate Tax Dodging Prevention Act
Would eliminate the deferral of tax on the foreign-source income of US corporations for taxable years beginning after December 31, 2013; deny the foreign tax credit to large integrated oil companies that are dual capacity taxpayers; limit the offset of the foreign tax credit to income that is subject to US tax; and treat foreign corporations managed and controlled in the United States as domestic corporations for US tax purposes.
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S 8
End Wasteful Tax Loopholes Act
Expresses the sense of the Senate that Congress should enact legislation to: (1) eliminate wasteful tax loopholes; (2) eliminate corporate tax loopholes and wasteful tax breaks for special interests; (3) enhance tax fairness by reforming or eliminating tax breaks that provide excessive benefits to millionaires and billionaires; (4) crack down on tax cheaters and close the tax gap; (5) use the revenue saved by curtailing tax loopholes to reduce the deficit and reform the federal tax code; (6) address provisions in the tax code that make it more profitable for companies to create jobs overseas than in the United States; and (7) reform the tax code in a manner that promotes job creation, competitiveness, and economic growth.
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HR 694
"Would require US companies to pay taxes on all of their income by ending the deferral of foreign source income. Corporations would pay US taxes on their offshore profits as they are earned. Would take away the tax incentives for corporations to move jobs offshore or to shift profits offshore because the US would tax their profits no matter where they are generated," according to bill sponsors.
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HR 4985
Stop Corporate Expatriation and Invest in America's Infrastructure Act
Would "put an end to corporate expatriations and devote the resulting revenue to the Highway Trust Fund. It will raise $19.5 billion in revenue over ten years and keep the Trust Fund solvent as Congress works on a long-term funding solution," according to bill sponsors.
Please keep in mind that highlighting a bill doesn't imply a POPVOX endorsement in any way. Rather, we're simply trying to offer one more way to stay informed of an overwhelmingly complex legislative system.
