Many see move as a way to dodge U.S. taxes.
BY: MARIO CANSECO
When Burger King Worldwide Inc. announced it had reached an agreement to buy Tim Hortons Inc. for $12.5 billion last month, most of the discussion north of the 49th parallel involved the future of our beloved doughnut and coffee chain. The key players in the deal were quick to point out that there would not be any massive changes to the brands or their products.
While Canadian politicians were mostly absent from discussions about the deal, the United States has seen a large amount of commentary and criticism. Ohio Sen. Sherrod Brown, a Democrat, has openly called for a boycott of Burger King, claiming that the merger is simply a “tax inversion.” Brown went as far as to use the verb “abandon” to describe Burger King’s actions in seeking to relocate its headquarters to Ontario, and urged his constituents to take their business to other companies that are still based in the U.S.
In a way, Brown’s disparagement was not a surprise. He is one of the foremost proponents of Buy American laws in Congress, and an outspoken critic of trade. Still, the merger is not only angering America’s protectionist left. The patriotic right has also expressed displeasure, effectively blaming America’s high federal corporate tax rate (35 per cent, compared with Canada’s 15 per cent) for Burger King’s departure.
With these two political extremes seemingly coming together, how do average Americans — those who may choose Burger King over other fast-food venues at their strip mall — feel about the deal?
A recent Insights West poll found that the merger is not exactly being welcomed with open arms in the United States. A majority of Americans — 58 per cent — believe Burger King is taking over Tim Hortons so that the American fast-food giant can avoid paying U.S. taxes. Among Americans aged 55 and over, the level of agreement with the tax inversion perspective climbs to 64 per cent.
In addition, almost two in five U.S. respondents — 39 per cent — expect many Burger King employees to lose their jobs as a result of this merger — including 45 per cent of those aged 18 to 34.
Finally, more than three in 10 Americans — 31 per cent — say they will visit Burger King less often than before as a result of the deal. The proportion of residents who would effectively endorse a boycott is highest in the U.S. Northeast, the country’s most densely populated region, at 36 per cent.
(The poll results are based on a Sept. 1-5 online survey of 1,007 American adults.)
While Americans may not have been paying as much attention to the merger as Canadians, the Insights West survey does provide some compelling statistics. It is clear that Burger King is not considered an American icon, certainly not at the same level that Tim Hortons enjoys in Canada. However, the possibility of a backlash as a result of the deal is certainly present.
Most Americans do not think, as the key players in the deal have repeatedly stated, that this transaction is about growth. The deal, for a majority, is regarded as an opportunity to take advantage of the situation for fiscal reasons.
Both protectionist Democrats and patriotic Republicans are already less willing to support Burger King with their wallets. Changing these perceptions in a country where left and right rarely coalesce will take more than a couple of opportune quotes on how the CEO likes his coffee.
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