Burger King's merger with a Canadian fast-food giant has little to do with fleeing U.S. taxes, and plenty to do with rewarding shareholders and chasing greater growth opportunities abroad, an economist and financial literacy expert told
Newsmax TV on Wednesday.
Steve Beaman told "MidPoint" host Ed Berliner that it's a mistake to bash the iconic, Florida-based burger franchise for using the so-called "inversion" provision in the tax code that has some politicians fuming — and U.S. firms taking advantage to become foreign corporate citizens.
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"When you combine the tax rates of Florida and the United States together with Ontario and the nation of Canada, there's not all that much difference," said Beaman, chairman of the the Society to Advance Financial Education. "It may save a few million for the company, but that's not why they're doing this. They're doing it much more for the synergy of the two brands."
All indications are that Burger King will remain "The King" in name, identity and menu, and that likewise no rebranding is in the cards for its new corporate partner, Tim Hortons, the Oakville, Ontario-based breakfast and
coffee purveyor beloved by Canadians.
The Burger King-dom already counts on overseas sales for half of its revenue, said Beaman.
"There's not a lot of growth to be had in the United States," he said. "They have to look abroad."
"This is a natural, synergistic merger," he said, adding, "Look at the stock prices: Burger King's up 30 percent; Tim Hortons is up 20 percent. This is good for the shareholders, and that's the bottom line.
"This wasn't done to evade taxes," said Beaman. "If they wanted to do that, they'd be going to a tax-free nation, and there are plenty of those around. They did it because of the synergy of the breakfast brand of Tim Hortons with the afternoon, [and] dinner brand of Burger King."
Politicians, primarily Democrats,
have blasted a wave of inversion deals as unpatriotic tax dodges by companies that owe their prosperity to the advantages of being American.
Beaman said that criticism is comparable to telling American homeowners, "If you take you mortgage deduction, you're not patriotic.
"This is a legal process," he said. "It's in the tax code. The government put it there."
He said
the calls for removing it aren't likely to go anywhere soon.
Beaman also said that corporations increasingly think globally, and that Burger King's 34-year-old CEO, Dan Schwartz, fits the mold.
"The younger generation sees a global economy, much more than just a U.S. economy, and this young guy … he is very smart, and he looks at the best value for his shareholders."