Burger King Faces Backlash on Tax Dodge Move

Burger King's decision to acquire the Tim Horton's doughnut chain and move its headquarters to Canada has caused blowback among consumers online and politicians on Capitol Hill.

So far, members of Congress and the public have discussed boycotting the burger chain, or potentially changing corporate tax rules so that fewer companies flee the U.S. It remains to be seen, however, whether the negative reaction is strong enough to move a dysfunctional Congress or motivate Burger King to change its strategy.

"If this merger goes through, there could well be a strong public reaction against Burger King that could more than offset any tax benefit it receives from a tax avoidance move," Sen. Carl Levin, D-Mich., said in a statement released Monday.

The controversy over the merger stems from the fact that it includes an "inversion," a legal move that lets a company shift profits overseas to avoid paying domestic tax rates. The statutory U.S. corporate tax rate in the U.S. is 35 percent, the highest in the world, although effective tax rates are much lower. Canada's nominal tax rate is about 15 percent.

The feedback from customers online has been harsh. Commenters on Facebook have left a deluge of posts on the Burger King page, calling the company "tax cheats" and "traitors." One comment with thousands of "likes" reads, "If you attempt to buy Tim Horton's for the purposes of evading US Taxes, I will NEVER step foot in another Burger King again...Don't do it."

MoveOn.org has started a petition online that reads, "Burger King benefits enormously from being an American company and should pay its fair share of taxes here in America. Don't even attempt this whopper tax dodge or we will boycott Burger King."

Public outrage over such deals has in the past influenced companies to change course. After groups against Walgreen's potential inversion gathered more than 300,000 signatures online, the company decided against moving to Switzerland. Walgreen CEO Greg Wasson said the move was "not the right course of action" in part because it could have led to "potential consumer backlash and political ramifications."