On August 26^th, 2014 Tim Horton’s and Burger King agreed to merge their companies (CTVNews, 2014). Before and after the deal, the latter was attacked by the US government, politicians and general public for the decision to move its headquarters to Ontario, Canada. Critics see this merger as a tax inversion maneuver by Burger King both to avoid paying additional US taxes and to pay lesser tax to the Canadian government. President Obama called US companies, which renounce their citizenship to escape tax payments, “corporate deserters” (Forbes, 2014).

So what is unethical in Burger King’s merge with Tim Horton’s? Well, first of all, according to BK’s announcement, their “headquarters will remain in Miami where we were founded more than 60 years ago” (Facebook, Burger King, Aug 26, 2014). At the moment, there is no official document or proof that BK moved to Canada. Second, the tax inversion should not be considered as a main reason of merging. Because this deal both makes international expansion possible and brings variety into BK’s menu, Burger King has a good chance to take on McDonald’s, its main competitor. Such perspective might be more appealing to the company than cutting its taxes. Third, in case the tax inversion is truly the main reason of the merger, one should take into account the decision of Federal Judge Learned Hand that “anyone may arrange his affairs so that his taxes shall be as low as possible; there is not even a patriotic duty to increase one’s taxes”.

Thus, while customers are warning that they will stop eating at Burger King if the company’s citizenship is renounced, the fast-food chain seems to be following all ethical standards of business.

References:

Done deal: Tim Hortons agrees to takeover by Burger King. CTVNews. Aug 26, 2014. http://www.ctvnews.ca/business/done-deal-tim-hortons-agrees-to-takeover-by-burger-king-1.1976444

Schaefer, S. Corporate America’s Hunt For Lower Taxes Won’t End With Burger King And Tim Horton’s. Forbes. Sep 5, 2014. http://www.forbes.com/sites/steveschaefer/2014/09/05/corporate-americas-hunt-for-lower-taxes-wont-end-with-burger-king-and-tim-hortons/

Burger King Ethics: What’s Unethical About Burger King’s “Tax Inversion” (And It’s Not Burger King). Ethics Alarms. Aug 27, 2014 http://ethicsalarms.com/2014/08/27/burger-king-ethics-whats-unethical-about-burger-kings-tax-inversion-and-its-not-burger-king/