Warren Buffett stands by Burger King deal

Politico – by Jonathan Topaz

Billionaire investor Warren Buffett on Thursday again defended Burger King’s purchase of Canadian chain Tim Hortons, a deal criticized by many as an inversion plan by the fast food company to avoid paying U.S. taxes.

Berkshire Hathaway, the conglomerate where Buffett serves as president and CEO, invested $3 billion to help finance the deal. Appearing on MSNBC, Buffett insisted that the purchase was not a tax dodge.  

“It is a corporate inversion and many corporate inversions are tax driven,” he conceded. But Buffett insisted that the more than $11 billion Burger King paid for Tim Hortons significantly outweighed any tax relief the company will receive by relocating to Canada. Critics have insisted that the purchase was largely motivated by the company’s desire to avoid paying high corporate taxes in the U.S.

Buffett cited statistics that the highest amount of federal tax the company has paid in the last three years is $30 million. “If anybody would be paying $11.8 billion to save $30 million of federal income tax, they did not go to the math class I went to,” he quipped.

He also reiterated a point he had made several weeks ago that Burger King is significantly smaller than Tim Hortons. “It’s a case of the larger company being in Canada,” he said. “Tim Hortons earns twice as much money as Burger King.”

Buffett over the years has emerged as an ally for President Barack Obama’s message of “economic patriotism” and tax fairness, urging higher rates for individuals and companies to pay their fair share. Buffett has made headlines for advocating for cracking down on millionaires who pay taxes according to the lower capital gains rate, noting that his secretary has paid higher rates than him. The president has often touted the so-called Buffett Rule named after the investor — a proposal that would ensure millionaires pay a minimum tax rate at least equal to that of middle-class people.

Buffett’s involvement in the Burger King deal provided complications for the White House, given its increased attention to clamping down on corporate inversions.

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