Corporate Social Responsibility to Pay Taxes

Posted on Posted in Corporate Responsibility, Uncategorized

In a recent article in Fortune by Allan Sloan titled Positively Un-American Tax Dodging he argues that corporations ought to do more than merely follow the laws, they ought to do the right thing. He says:

Bigtime companies are moving their “headquarters” overseas to dodge billions in taxes … that means the rest of us pay their share.

. . . a new kind of American corporate exceptionalism: companies that have decided to desert our country to avoid paying taxes but expect to keep receiving the full array of benefits that being American confers, and that everyone else is paying for.

Yes, leaving the country–a process that tax techies call inversion–is perfectly legal. A company does this by reincorporating in a place like Ireland, where the corporate tax rate is 12.5%, compared with 35% in the U.S. Inversion also makes it easier to divert what would normally be U.S. earnings to foreign, lower-tax locales. But being legal isn’t the same as being right.

I couldn’t agree more, which is basically what I’ve been arguing in my last couple of posts on corporate social responsibility here and here.

Inversion is legal but it isn’t moral. There is a big difference and we need corporations to act not merely legally but morally as well.

Sloan uses a kind a social contract type of argument to make a case why corporations ought to pay their fair share of taxes. Since they make use of the benefits the United States government provides they ought to be willing to pay for those benefits by paying taxes. And I would certainly agree taking the benefits of society that are paid for by taxes without being willing to pay one’s fair share of taxes is morally wrong.

What I think this highlights is that talk of “corporate social responsibility” is really talk of corporate moral responsibility. When we say that corporations ought to be more socially responsible we are saying they ought to act morally.

A person can be moral reprehensible without breaking the law and so can a corporation. Good corporate citizenship is about being kind, generous, a good neighbor, helping people, being an asset to one’s community etc. in the same way that good citizenship is about all those same things.

Corporations, to be morally decent, need to be working to pass laws that work to everyone’s advantage not psychopathically looking to exploit every loophole in the law to their advantage.

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