This past Thursday, Warren Buffett, billionaire investor, defended Burger King and their purchase of Tim Hortons, a Canadian doughnut chain. This deal has been criticized by many Americans as an inversion plan by the company to avoid paying taxes in the United States.
Berkshire Hathaway, the company where Warren Buffett serves as the CEO and president, invested $3 billion in order to help finance this deal. When appearing on MSNBC, Buffett was very clear that the purchase was not a way to dodge taxes.
“It is a corporate inversion and many corporate inversions are tax driven,” conceded Buffett. But in the end, he ultimately insisted that the $11 billion that Burger King is paying for Tim Hortons significantly outweighs more than the tax relief that the company is going to receive when they relocate to Canada. Critics still insist that this purchase is motivated in large part by the desire to no longer pay United States corporate taxes.
Buffett has provided statistics saying that the most amount of money that Burger King is paid in federal taxes over 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,” quipped Buffett.
He also chose to reiterate a point that he made a few weeks ago that Burger King is actually much 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.”
Over the years, Warren Buffett has emerged as an ally for the president and his message of “economic patriotism” and fairness for taxes. Buffett advocates higher rates for companies and individuals and said that they should pay their fair share, and they should. Buffett has consistently made the headlines for advocating a cracking down on millionaires who pay taxes based on a lower capital gains rate, noting that his secretary actually pays higher tax rates that he does. Pres. Obama often touts the Buffett Rule which was named after the investor – and it is a proposal that would ensure millionaires have to pay a minimum tax rate equal to those of the middle class people.
Buffett getting involved in the Burger King deal has provided complications for the White House, especially since it is paying increased attention to clamping down on corporate inversions.