Buffett Called Hatch to Gauge Inversion Policy, Senator Says

Buffett, chairman and chief executive officer of Berkshire Hathaway Inc., is helping finance Burger King Worldwide Inc.’s purchase of Tim Hortons Inc. and its move to Canada. That transaction could be affected by legislative and regulatory changes being considered in Washington.

“He called me and he said you’ve got to do something about tax inversions,” said Hatch of Utah, deviating from his prepared remarks today in a speech at the U.S. Chamber of Commerce in Washington. “I think he wanted to know where we were going and he knows I’ll tell him the truth, which I did.”

U.S. lawmakers are deadlocked on curbing tax inversions and appear to be heading toward leaving Washington for the campaign season without acting on the issue. The Treasury Department is studying its administrative options and will make a decision in the “very near future,” Secretary Jacob J. Lew said this week.

“We’re friends,” Hatch said, referring to Buffett. “I think the world of him in many respects. I’ll never understand why he’s a Democrat.” Hatch, 80, is poised to become Finance Committee chairman if Republicans take over the Senate majority.

Burger King

The call happened before Burger King “reached final agreement” on the deal and “consequently well before it was announced” on Aug. 26, Debbie Bosanek, Buffett’s assistant at Omaha, Nebraska-based Berkshire, wrote in an e-mail today. “Mr. Buffett tells me that in addition to inversions, they talked about other matters. Senator Hatch made his usual friendly attempt to convert Mr. Buffett to the Republican Party.”

Buffett, 84, is the third-wealthiest person in the world with a fortune of $67.6 billion as of yesterday, according to the Bloomberg Billionaires Index. His father, Howard, was a Republican member of Congress.

Buffett, who has been an informal tax policy adviser to President Barack Obama, a Democrat, said in a 2012 Bloomberg documentary that his political views were shaped in part by civil rights issues. He said Democrats were “much more attuned” to that.

Executives from Miami-based Burger King have said the transaction wasn’t designed to reduce taxes and wouldn’t lower the company’s tax bill significantly.

Paying More

Charles Munger, Berkshire’s 90-year-old vice chairman, said yesterday that Berkshire will pay the U.S. government more because of its $3 billion investment in the deal.

“Anyone who thinks this is a great tragedy and a great injustice is stark raving mad,” Munger said regarding the fact that the new company will be based in Canada. “It’s a non- event.”

Because the combined company will have substantial operations in Canada, it probably wouldn’t be affected by a bill that would generally prevent U.S. companies from buying smaller foreign businesses and taking their addresses for tax purposes. The combined company could be hurt by limits proposed by Senator Charles Schumer of New York, who wants to curb inverted companies’ interest deductions.

Berkshire will earn 9 percent annual interest on its $3 billion investment tied to the Burger King deal and has the option to buy a 1.75 percent stake in the combined restaurant company.

High Bar

Hatch, who sharply countered the administration’s criticism of inverting companies as unpatriotic, has set what he described as a high bar for his support for any stopgap tax measure to stem inversions.

Any bill, he said, must be revenue-neutral, apply only prospectively and move the government toward a tax-code revamp that would mean lighter taxes on U.S. companies’ foreign income.

The current set of Democratic proposals, he said today, don’t meet those tests, which he called non-negotiable.

“I know I’ve set a pretty high bar for any potential approach to dealing with inversions, and that’s not by accident,” Hatch said.