Fast Food Protests: Workers Want $15 Minimum Wage but Burger King Fancies Canada for Lower Taxes
Fast food giant, Burger King, has been in the news headlines recently because of worker's protests demanding a minimum wage increase to $15, but the corporation is considering something much bigger, moving its whole operations to Canada for tax reasons.
U.S. Senators told the Whopper maker that's "unpatriotic."
In August, Burger King expressed interest in buying a Canadian coffee and donut chain, Tim Hortons, and move its operations to take advantage of Canada's lower tax rates at 15 percent. An additional benefit under the Canadian tax system is that companies do not pay extra taxes on income earned abroad.
Burger King is the latest of a number of corporations seeking to take advantage of the lower tax rates in other countries, but it's caused ire for Washington lawmakers.
A group, Led by Democratic U.S. Senator Dick Durbin, wrote to the company CEO reminding him how the corporation benefits from American taxpayers when the company uses roads, food safety inspectors, food stamps and Medicaid.
"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, 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, calling the move "unpatriotic."
The letter was signed Senate Democrats Jack Reed, Sherrod Brown, Carl Levin and Independent Bernie Sanders.
This corporate trend is call "inversion" -- a term for incorporating in another country, and taking advantage of a lower tax rate like Ireland's 12.5 percent, or the U.K.'s 20 percent. Many corporations think the U.S.'s 35 percent tax rate is too high and uncompetitive. Plus a corporation has a fiduciary responsibility to shareholders requiring them to produce maximum returns.
U.S. household names like Nielsen, Carnival, Michael Kors have adopted inversion. The pharmaceutical giant, Pfizer, tied to buy a company in the U.K. this summer. But the deal fell through, and Walgreens wanted to move its operation to Switzerland, according to Fortune magazine.
The Congress Joint Committee on Taxation and the Obama Administration has estimated if this trend continues there will be a loss of $19.5 billion over 10 years.
A 2004 law said a company can only invert if it is doing business in a significant way in its new country of operation, and the shareholders of the company it buys own 20 percent of the company.
New suggestions for changing the law are to put the percentage up to 50 percent, and a Republican supported Tax Reform Act would impose taxes on money held offshore.
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