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 Burger King announced in August plans to buy the Canadian
restaurant chain for $11.5 billion. Canada has a lower corporate tax
rate than the United States, and it does not require companies based
there to pay extra taxes on income earned abroad, so the deal was
expected to yield tax savings.
Dick Durbin, the No. 2 Senate Democrat, and four other lawmakers
argue that move is unfair because many Burger King workers count on
programs such as Medicaid and food stamps that rely on taxpayer
funding.
They also said, in a letter to Burger King Chief Executive Officer
Daniel Schwartz that was dated Thursday, that the burger chain uses
taxpayer-supported roads, food safety inspectors and other perks of
doing business in the United States.
"Now, after profiting from these taxpayer-funded benefits, Burger
King intends to move its tax address overseas to avoid paying its
fair share for these benefits," the group said in the letter, which
was viewed by Reuters.
"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," they said.
In addition to Durbin, Senate Democrats Jack Reed, Sherrod Brown,
Carl Levin, and Independent Bernie Sanders signed on.
At least nine U.S. companies are in the final stages of inversions,
which involve buying a competitor in a lower-tax country and basing
the combined business there.
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Democrats, worried the moves will erode the U.S. corporate tax base,
have called the deals "unpatriotic" and floated a number of
proposals to crack down on them.
Drug store chain Walgreen Co <WAG.N>, which is based in Durbin's
state of Illinois, considered inverting as part of its purchase of
European retailer Alliance Boots Holdings. After Durbin and others
slammed the move, Walgreen said last month that it would not move
overseas after all.
Burger King has said that its deal is largely about opportunities
for growth and that its headquarters would remain in Miami.
But Durbin and the other senators urged Burger King not to move its
tax domicile either, saying its workers and the people who run the
chain's franchises would likely suffer if it did.
(Reporting by Emily Stephenson; Editing by Lisa Shumaker)
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