Buffett Burger King Funds Flip Obama’s Inversion Calculus [View all]

[Purveyor]

By Jonathan Allen, Richard Rubin and Noah Buhayar Aug 26, 2014 2:52 PM ET

Billionaire Warren Buffett was an ally of President Barack Obama during the 2008 presidential campaign and the force behind Obama’s “Buffett Rule,” designed to increase tax bills for the wealthiest Americans.

Now, the second-richest man in the U.S. has dented Obama’s effort to stamp out corporate inversions.

Buffett’s financing of Burger King Worldwide Inc. (BKW)’s $11.4 billion purchase of the Canadian fast-food chain Tim Hortons Inc. (THI) challenges Obama’s argument that inversions are unpatriotic and gives defenders of the practice leverage to make their case.

“Warren Buffett has nothing to be defensive about -- this looks like a smart investment that should benefit his shareholders,” said Tony Fratto, a Treasury Department and White House official in President George W. Bush’s administration. “As for the White House and Treasury, I hope they learn something here.”

The lesson, business advocates say, is twofold: Such deals that move companies’ addresses out of the U.S. are often about bigger long-term profits, not just the tax benefits Washington focuses on, and attempts to pressure markets by shaming companies are misguided.

Burger King Chief Executive Officer Daniel Schwartz framed the tax effect as minimal and peripheral -- not central -- to his company’s decision to merge and put the combined company’s address in Canada.

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http://www.bloomberg.com/news/2014-08-26/buffett-burger-king-funds-flip-obama-s-inversion-calculus.html