Warren Buffett called Sen. Orrin Hatch, R-Utah, to glean information about possible congressional efforts to stop corporations from leaving the U.S. before financing a deal to send Burger King to Canada, the senator said Thursday.
Noting that he’s friends with Buffett, the third richest person in the world, Hatch said that the Omaha-based investor “called me to say, ‘you gotta do something about tax inversions.’ I believe that was before he entered into the Burger King situation. I think he wanted to know where we were going.”
Hatch’s comments about Buffett were delivered, apparently extemporaneously, during a speech at the Chamber of Commerce that more broadly outlined his opposition to Democratic legislation meant to stop corporate tax inversions, and included harsh criticism of the Obama administration for failing to enact corporate tax reform. Inversions are tax maneuvers in which companies buy business in low-tax countries and move their headquarters overseas.
Burger King acquired the Canadian coffee and doughnut chain Tim Hortons in August, in a deal for which Buffett’s firm Berkshire Hathaway provided $3 billion in financing. The newly created company’s headquarters will be located in Canada if the deal goes through, although Burger King executives have claimed that it was for business reasons and note to take advantage of Canada’s lower corporate taxes.
“Honestly I don’t like it,” Hatch said of the deal and Buffett’s involvement, “but he’s moving within the law.”
An assistant to Warren Buffett confirmed the call. “Mr. Buffett did call Senator Hatch and it was before the Burger King deal was finalized and announced,” wrote an aide to Buffett in response to a email from the Washington Examiner. She added that Buffett and Hatch “talked about tax inversions but also other matters. They are friends and Mr. Buffett tells me that Senator Hatch always tries to convert Mr. Buffett to the Republican Party.”
Hatch brought up Buffett to push back against the Obama administration’s rhetoric on corporate inversions. Obama has described companies seeking inversions as “corporate deserters,” and Treasury Secretary Jack Lew has accused them of a lack of “economic patriotism.”
“Talk about a despicable set of words,” Hatch said, adding that “it’s this heavy handed political rhetoric that’s unpatriotic if you ask me.”
Hatch described Buffett as “the president’s own unpaid economic adviser,” a reference to Buffett’s past support for Obama’s tax policies. In the past, Hatch noted, Buffett has claimed that “there’s no business obligation to maximize one’s tax bill, saying of his tax bills that ‘we don’t add a tip. And we do certain transactions that are tax-driven.’”
Democrats’ efforts to stop inversions through legislation, Hatch claimed, “are not designed to improve the business climate in the U.S. Instead, they are intended to build walls around American corporations.”
As the top Republican on the Senate Finance Committee, Hatch’s support would be key to any anti-inversions measure to clear the Senate and be considered in the Republican House of Representatives.
Hatch has repeatedly said that he will not support any short-term inversions measures that were punitive, retroactive or that did not move the tax system toward overall reform. Despite his tough words for Obama and Democrats, Hatch said that he continues to work with Senate Finance Committee Chairman Ron Wyden, D-Ore., to draft legislation. He gave no timeline on the process, however, nor did he comment on its prospects for success.
Lew confirmed this week that the Treasury is very close to making a decision about using regulations to make inversions less attractive to businesses if Congress doesn’t act. “I’m certainly going to scrutinize anything they do,” Hatch said of the possibility, claiming that the Obama administration has stretch its authority with a number of executive actions.
