Dems urge Burger King to reconsider
Senate Democrats warned Burger King on Thursday that the fast food chain could be hurting its bottom line by shifting its legal address to Canada.
{mosads}Majority Whip Dick Durbin (Ill.), joined by four other liberal senators, urged the burger giant to reconsider its decision to merge with the Canadian doughnut chain Tim Hortons.
“Many of your loyal customers may choose to spend their hard-earned money at one of your many competitors, instead of supporting a company that wants all the benefits of America but refuses to pay its fair share to support our nation,” the senators wrote to Burger King chief executive Daniel Schwartz.
Sens. Sherrod Brown (D-Ohio), Carl Levin (D-Mich.), Jack Reed (D-R.I.) and Bernie Sanders (I-Vt.) joined Durbin’s letter.
Democrats have been pushing legislation to basically make it impossible for a U.S. company to merge with a smaller foreign company without being counted as American for tax purposes.
But that proposal would appear to have little effect on Burger King’s merger, because Tim Hortons does so much business in Canada, where the parent company is scheduled to be located.
Sen. Charles Schumer (D-N.Y.), joined by Durbin, also released a measure this week that seeks to limit earnings stripping, in which U.S. subsidiaries get a tax break off of loans from foreign parent companies. That bill could limit the economic benefits of the merger for Burger King.
But neither bill is expected to go anywhere in Congress anytime soon. In the meantime, the Obama administration could take unilateral steps in the “very near future,” Treasury Secretary Jack Lew said this week.
In their letter, the five senators said, even as Burger King’s parent company would be set up in Canada, the company would still be heavily reliant on American infrastructure. Burger King executives have repeatedly said taxes weren’t a driving force in their decision to merge with Tim Hortons.
“Perversely it will be your franchisees — small business owners who remain loyal U.S. taxpayers — that will suffer from your actions, while reaping none of the benefit from your decision,” the senators wrote.
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