WASHINGTON (Reuters) - A group of U.S. senators wants Burger King Worldwide BKW.N to scrap its plans to invert, or move its tax domicile to Canada, as part of a deal to buy coffee and donut chain Tim Hortons Inc THI.TO.
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.
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