October 1, 2014

WASHINGTON, D.C. – Yesterday, Congresswoman Jackie Speier (D-San Francisco/San Mateo Counties) sent a letter to Dr. Laura Junor, Principal Deputy Under Secretary of Defense for Personnel and Readiness, demanding the military cancels its exchange contracts with Burger King. The restaurant currently has 173 locations at U.S. military bases at home and overseas.

“Burger King can have it their way and dodge U.S. taxes, but that doesn’t mean they get to enjoy benefits from U.S. taxpayers,” said Congresswoman Speier. “Exchange services on military bases, such as Burger King, may not receive appropriated funds, but they receive tens of millions of dollars in in-kind benefits. They are exempt from rent at the base, they don’t pay military personnel they hire, and they receive free utilities overseas, all courtesy of the tax pool they have worked so hard to avoid. The military should not do business with corporations that refuse to pay their fair share.”


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Text of the Letter:

Dear Dr. Junor:

I am writing to demand you to exercise any options you have available to cancel your exchange contracts with Burger King. As I am sure you are aware, Burger King recently announced their plans to merge with the Canadian company Tim Hortons and move the company’s headquarters to Canada, allowing them to significantly decrease the amount of taxes paid to the United States.  Government facilities and the dollars of our service members should go to American companies, not to tax-dodging international corporations. But the Navy Exchange and the Army and Air Force Exchange Service (AAFES) report that Burger King currently has 173 locations at U.S. military bases at home and overseas.

Corporate tax inversions like these are costing the U.S. tax base billions of dollars in lost revenue. According to the Congressional Research Service, 47 U.S. companies have reincorporated to other countries to gain lower tax rates in the last 10 years, and Bloomberg found that nine other companies plan to do so in the coming year. The Joint Committee on Taxation estimates that legislation to stop these inversions would save the U.S. nearly $20 billion over 10 years.

Though exchanges do not run on appropriated funds, they receive tens of millions in benefits indirectly from taxpayer dollars by being exempt from rent from U.S. properties owned by the U.S. government, not paying salaries for military personnel working at the exchanges, and receiving free utilities associated with overseas exchanges. As you are aware, DoD Instruction 4105.67 lays out that the Department of Defense favors and promotes the sale of U.S. merchandise and services.

As the official responsible for overseeing these exchanges, I demand you exercise your authority to end contracts with corporations that utilize tax inversion to avoid paying U.S. taxes and preserve these opportunities for businesses that are proud to be American businesses. If you do not have this authority, please respond in writing with what additional authorities you would need to enhance your oversight powers over the exchanges to ensure business integrity.

Additionally, please provide:
1.    Copies of the exchange’s contracts with Burger King;
2.    Any audits or performance reviews of Burger King on military exchanges.

Thank you for your attention to this matter, and I look forward to your response.

Sincerely,

Jackie Speier