There’s a storm raging in the halls of Congress among Democrats. It will soon shake your windows and rattle your walls. Well, not really. Burger King is moving it’s Headquarters to take advantage of lower taxes … in Canada. Well, not really. But yes, the corporate tax rate under the Conservative Government of Prime Minister Harper has come way down in the last few years compared to Canada’s Liberal Party days. According to the OECD, the combined federal, provincial, and local corporate tax rate is 26.3% compared to 39.1% in the US. But Burger King’s effective tax rate, according to its own annual report was 27.5% last year. And the company that Burger King will be swallowing up to the tune of 11 billion dollars, Tim Horton’s, had an effective tax rate last year of 26.8%. So, this isn’t really about taxes, it’s about breakfast.

Burger King wants to break in to the morning coffee and McMuffin market and sees Tim Horton’s – a doughnut, coffee and sandwich franchise that spreads right across Canada – as the perfect product to bring to the US market. Not that Tim Horton’s hasn’t tried to break into America. Their $600 million plus expansion into the US market has failed to impress consumers and now they seem to have found a willing buyer. Part of the deal is that the combined companies, (each of which will keep its current head office in place in Miami and Oakville Ontario), will have their headquarters in Canada. This is the part that has Democrats threatening punitive legislation. How many lawyers and accountants will actually troop north of the border from sunny Miami, remains to be seen. The combined HQ seems more of a pat on the head to Canadians who will lose one of their favorite franchises to the clutches of the Florida colossus. In fact, however, Burger King is owned by 3G Capital, a Brazilian investment firm which will own 51% of the combined companies. Yes, it may garnish a few tax savings by moving north but this seems more of a strategic alliance to try and wiin the fast-food war against MacDonald’s. Of course, should the corporate climate turn colder in Canada, the newly formed fast-food colossus can always think about moving the combined head office back south. Way south, to somewhere like Sao Paolo. Given Brazil’s left wing politics and rising inflation, that may be some time away.