Burger King is moving to Canada

[SlugSlinger]

Not the anyone eats there, this is more of an intellectual exercise about tax rates and the consequences to tax revenue for OSA.


The reality of the US corporate tax structure.

We’re losing Burger King because the Canadian corporate tax rate is 26% vs the US at 40%.

So as every economist knows, when tax rates increase, tax revenue declines.


Oh, and Obama’s Warren Buffett is financing the deal. Didn’t Buffett say the rich wanted to pay MORE taxes? Weird…


Yet another American company is aiming to move its headquarters out of the country.

International fast food behemoth Burger King Worldwide Inc. confirmed Tuesday that it will pay about $11 billion to buy Canadian chain Tim Hortons Inc., which sells coffee, donuts, and other breakfast food fare. The deal would merge America's second-largest burger chain, which is valued at nearly $10 billion, with the Canadian equivalent to Dunkin' Donuts, which is valued at more than $8 billion. It would also move the new company's headquarters to Canada, where corporate taxes are significantly lower.

The newly merged company would become the world's third-biggest "quick service restaurant company," with more than 18,000 restaurants in 100 countries, said Burger King and Hortons in a statement Monday. The deal would create a business capable of rivaling Yum Brands, which owns Taco Bell and Pizza Hut, and is valued at more than $30 billion. But while Yum Brands operates from Louisville, KY, the new Burger King and Tim Hortons parent company would likely station itself in the Ontario province of Canada.

On the surface, the reason for a headquarter shift across the country's northern border is simple: lower corporate taxes.

As we have have noted before, when a company reincorporates abroad, as the practice is known, what it's really doing is shifting its corporate citizenship; and when a company shifts its corporate citizenship, what it's really doing is trying to pay less in taxes. The effective corporate tax rate in the U.S., which combines national, state, and city-level tax rates, is nearly 40 percent-the highest across all 34 Organization for Economic Cooperation and Development (OECD) member countries. Canada's, by comparison, is just over 26 percent.

http://online.wsj.com/articles/warr...rger-kings-takeover-of-tim-hortons-1409012196

 

[Blinocac200sx]

I eat at BK. Sometimes there is just nothing like a whopper.

 

[SlugSlinger]

And the usual and anticipated democrat response. Boycot! Let's not only lose the corporate tax revenue, let's put them out of business and let all the employees go to the tax payer teet.


Dem Senator Calls For Boycott Of Burger King

NEW YORK (CBS Cleveland/AP) - Burger King says it struck a deal to buy Tim Hortons Inc. for about $11 billion, a move that would give the fast-food company a stronger foothold in the coffee and breakfast market.

The corporate headquarters of the new company will be in Canada, which stands to help lower Burger King’s corporate taxes. Such tax inversions have been criticized by President Barack Obama and Congress because they mean a loss of revenue for the U.S. government. Burger King and Tim Hortons said the chains will continue to be run independently and that Burger King will still operate out of Miami.

The deal would create the world’s third largest fast-food company with about $23 billion in sales and more than 18,000 locations, the companies said.

Sen. Sherrod Brown, D-Ohio, is calling for a boycott of 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. 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,” Brown said in a statement. “To help business grow in America, taxpayers have funded public infrastructure, workforce training, and incentives to encourage R&D and capital investment. Runaway corporations benefited from those policies but want U.S. companies to pay their share of the tab.”

Brown called for a creation of a global minimum tax rate.

“We need an immediate fix to forestall a flood of these dangerous inversions and a long term solution that lowers corporate tax rates while instituting a country-by-country global minimum tax,” Brown added. “This kind of common sense reform will close down tax havens that cost our country revenue and cost American jobs. Lowering the statutory corporate tax rate would put companies on a level playing field with foreign competitors and reduce the incentive for them to shift jobs and profits overseas. Creating a global minimum tax rate will increase investment in the United States, raise revenue, and prevent a global race-to-the-bottom.”

The tie-up could help Burger King and Tim Hortons pose a greater challenge to market leaders such as McDonald’s and Starbucks and reflects a desire by both companies to expand internationally. Burger King, which has nearly 14,000 locations, has been striking deals to open more locations in developing markets. The company sees plenty of room for growth internationally, given the more than 35,000 locations McDonald’s has around the world. Tim Hortons has more than 4,500 locations, mostly in Canada.

Back in the U.S., breakfast and coffee have been hot growth areas in the fast-food industry. Between 2007 and 2012, breakfast grew faster than any other segment in the restaurant industry at about 5 percent a year, according to market researcher Technomic. But it has long remained a weak spot for Burger King.

McDonald’s Corp. led the category with 31 percent of the market in 2012, while Burger King Worldwide Inc. had just 3 percent to 4 percent, according to Technomic. As newer players such as Taco Bell have pushed into breakfast, McDonald’s has said it plans to put more marketing muscle behind coffee as a way to get more customers in the door.

3G Capital, the investment firm that owns Burger King, will own about 51 percent of the new company. The firm, which has offices in Brazil and New York, has been slashing costs at Burger King since buying it in 2010. Last year, 3G teamed up with Warren Buffett’s Berkshire Hathaway to buy ketchup maker Heinz as well.

Berkshire Hathaway is also helping finance the Tim Hortons deal with $3 billion of preferred equity financing, but will not have a role in managing operations.

Under the deal, Burger King will pay $65.50 Canadian ($59.74) in cash and 0.8025 common shares of the new company for each Tim Hortons share. This represents total value per Tim Hortons share of $94.05 Canadian (US$85.79), based on Burger King’s Monday closing stock price. Alternatively, Tim Hortons shareholders may choose either all-cash or all stock in the new company.

Tim Hortons stock rose more than 10 percent in Tuesday premarket trading. Burger King’s shares fell slightly.

 

[SlugSlinger]

I eat at BK. Sometimes there is just nothing like a whopper.

I never acquired the taste of thousand island dressing on a burger. I do like their plane cheeseburgers.

 

[Blinocac200sx]

You're thinking the Big Mac. The whopper has Mayo.

 

[SlugSlinger]

You're thinking the Big Mac. The whopper has Mayo.

Yep, your right. The whopper doesn't have the special sauce.

 

[KOPBET]

I don't eat meat with special sauce.

 

[tntrex]

I'm sorry but I refuse to eat bk or mcdoodoos. They don't even use 100% American beef. If I go to a fast food burger it is whataburger- at least they fully support American beef producers.

 

[crrcboatz]

i'm sorry but i refuse to eat bk or mcdoodoos. They don't even use 100% american beef. If i go to a fast food burger it is whataburger- at least they fully support american beef producers.

bingo!!!!

 

[Rod Snell]

The long term solution is to put our corporate tax rate at 25% and close the special interest loopholes.
I heard a good speech on the economics today and the need to lower THE HIGHEST CORPORATE TAX RATE IN THE WORLD by none other than...wait for it...BILL CLINTON.