Burger King’s decision to buy the Tim Horton’s chain on the 26th of August and to ultimately relocate as a combined firm in Canada has spurred enormous controversy. There is continuously an ongoing debate in the US about the corporate tax system and Burger King has brought this issue to the forefront once again. Burger King claims that purchasing Tim Horton’s will allow for growth and expansion of its franchise. However, the public sees this move as a tax inversion and something that is unethical. Earlier this summer, Obama addressed this corporate issue saying “I don’t care if it’s legal, it’s wrong.”
In my opinion, Burger King’s actions are ultimately unethical, however, they are justifiable to a certain extent. In the past decade, Burger King has been oppressed by fast food giants such as McDonalds and it has struggled to break even. However, this does not give the company the right to not pay its taxes. Although tax inversion is probably the driver of Burger King’s move, Tim Horton’s as a breakfast franchise gives Burger King an opportunity to leverage itself above fellow competitors abroad. The company is poised to potentially expand Tim Horton’s into the 100 countries in which it operates within. Burger King faced the inevitable problem of business ethics. If I were the CEO of Burger King, I would find it difficult to choose not to minimize costs. In theory, it should be in my best interest to relocate and cut corporate taxes. However, I believe that the implicit costs outweigh the explicit costs. This means that relocation will create such a negative image of Burger King that the loss of customers and support will make tangible cost benefits inconsequential. Furthermore, it is not just unethical, it is immoral to escape from taxes, as it disrupts the whole economy at the expense of one company’s benefit.
http://www.theguardian.com/business/2014/aug/26/burger-king-tim-hortons-11bn-deal
http://www.bnn.ca/News/2014/8/26/Tim-Hortons-poised-to-bolster-Burger-King-breakfast-fare.aspx