A couple of weeks ago, I wrote about Burger King's tax inversion strategy--you know, the clever tax dodge strategy that's all the rage among the corporate elite because it funnels hundreds of billions of dollars overseas and outside the reach of the IRS. Well, that apparently isn't the half of it. Burger King has a two-pronged approach to screwing the country--at the waistline and at the bottom line.
No one really has to be told what horrendous slop gets shoveled across the counter at Burger King. Basically, that slop kills people but it's a golden slot machine that never stops generating huge revenues for the company.
And where do those revenues go? Abroad. Hidden. And not in some penny ante way. Citizens for Tax Justice tells us:
Burger King's recent decision to pursue a corporate inversion to Canada is the culmination of years of maneuvering to dodge paying its fair share in corporate taxes. In fact, Burger King was able to cut its average worldwide effective tax rate by more than 60 percent over the past few years likely through complex accounting maneuvers.[emphasis added]
How?
The first key point to know is that Burger King only owns a small percentage of its thousands of restaurants worldwide, with the overwhelming majority of its restaurants owned by individual franchisees who pay Burger King for use of its intellectual property. From the beginning of 2010 (when private equity firm 3G Capital purchased the company) through the end of 2013, Burger King went from owning about 12 percent of its worldwide restaurants (1,422), to owning less than half a single percent of its worldwide restaurants (52).
Unlike physical properties such as restaurants, stores or even factories, it's relatively easy to shift the location of income-generating intellectual property from one jurisdiction to a different low- or no-tax jurisdiction. This may explain why, after its purchase by 3G Capital in 2010, Burger King reorganized its business structure by shedding ownership of nearly all the individual restaurants that it owned.
And shifting its profits to Switzerland, Singapore, Luxembourg, Hong Kong and the Netherlands does what?:
Burger King's strategy of profit-shifting and relying more heavily on intellectual property came to fruition in 2013, when it was able to lower its worldwide effective tax rate to a mere 11 percent. For purpose of comparison, the company's average worldwide effective tax in the three years before it embarked on its aggressive tax dodging maneuvers was nearly 28 percent, meaning that company was able to lower its tax rate by 60 percent over just a few years.
So, look, if the fact that that food is killing a lot of people isn't enough reason to avoid the Whopper, perhaps the fact that the company does everything it can to dodge taxes--with tax inversions and lots of other maneuvers--will make some people willing to spend their food money elsewhere.