Burgers, Doughnuts, and Expatriations: An Analysis of the Tax Inversion Epidemic and a Solution Presented Through the Lens of the Burger King-Tim Hortons Merger

Abstract

Currently, the concept of tax inversion is a major corporate phenomenon. In the United States, companies pay taxes on all earnings, whether or not they were accumulated here. With one of the highest corporate tax rates in the world, this is a major expense for U.S. corporations competing in the world market. While most companies simply deal with the tax burden, some U.S. corporations buy foreign companies and relocate the company headquarters to the acquisitions home country. This corporate expatriation allows companies to avoid U.S. taxes on earnings in a number of ways. This Note will examine tax inversion through the lens of the 2014 Burger King-Tim Hortons merger and the resulting expatriation of the American burger purveyor from Florida to Canada. In particular, this Note will (1) examine why tax inversions have come about, (2) look at how politicians and academics have reacted to the phenomenon, (3) analyze the intricacies of the Burger King-Tim Hortons merger, and (4) propose a new solution that would actually curtail tax inversions and corporate expatriations within the United States