Warren Buffett should explain Burger King deal, which looks to some like tax evasion
08/26/2014 10:07 AM
08/26/2014 7:16 PM
Warren Buffett might very well be America’s favorite investor, but his latest deal may prove to be highly unpopular with his acolytes.
Buffett’s Berkshire Hathaway is putting up 25 percent of the financing — about $3 billion — for Burger King’s acquisition of Canadian fast-food operator Tim Hortons. In doing so, he is wading deeply into the political debate over corporations and taxes.
This looming deal of food giants seeking a larger global footprint appears to involve what’s called a tax inversion. The combined company would be headquartered in Canada, which has a lower tax rate than the U.S., though the Burger King operation would remain in Miami.
To many people, “inversion” sounds a lot like tax evasion. Congressional Democrats and President Barack Obama have been challenging such deals. The outcry, for example, may have recently caused the Walgreen Co. to change its mind about moving to Switzerland as part of the acquisition of a drug company.
It’s hard to believe that this multibillion-dollar deal is solely dependent on the tax savings presented by a corporate flight across our northern border.
Buffett and Burger King executives on Tuesday said as much. Buffett should make himself very clear on the logic and appearance of this deal. Given his vast influence, he should do so quickly and convincingly.
Join the Discussion
The Kansas City Star is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere on the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.