Contact Reed Smith at firstname.lastname@example.org for further information
Contact Reed Smith at email@example.com for further information
I am looking forward to presenting at this conference next month. Looks like a great group of academics and practitioners.
Cross-posted at Business Law Prof Blog.
University of Cincinnati College of Law
The 29th Annual Corporate Law Center Symposium – Corporate Social Responsibility and the Modern Enterprise
March 18, 2016
8:45 a.m. – 3:30 p.m.
Hilton Netherland Plaza
This event is free. CLE: 5.0 hours, pending approval.
Presented by the University of Cincinnati College of Law’s Corporate Law Center and Law Review.
Symposium materials will be available on March 14 at: law.uc.edu/corporate-law-center/2016-symposium
Please register by contacting Lori Strait: email Lori.Stait@uc.edu; fax 513-556-1236; or phone 513-556-0117
Introduction, 8:45 a.m.
Keynote, 9:00 a.m.
Clare Iery, The Procter & Gamble Company
Social Enterprises and Changing Legal Forms, 9:30 a.m.
Mark Loewenstein, University of Colorado Law School
William H. Clark, Jr., Drinker Biddle & Reath LLP
Haskell Murray, Belmont University College of Business
Russell Menyhart, Taft Stettinius & Hollister LLP
Sourcing Dilemmas in a Globalized World, 11:00 a.m.
Steve Slezak, University of Cincinnati College of Business
Marsha A. Dickson, University of Delaware Department of Fashion & Apparel Studies
Tianlong Hu, Renmin University of China Law School
Anita Ramasastry, University of Washington School of Law
CSR and the Closely Held Company, 1:15 p.m.
Eric Chaffee, The University of Toledo College of Law
Michael Petrucci, FirstGroup America, Inc.
Lisa Wintersheimer Michel, Keating Muething & Klekamp PLL
Sourcing From the Enterprise Perspective, 2:30 p.m.
Christopher Bedell, The David J. Joseph Company
Walter Spiegel, Standard Textile Co. Inc.
Martha Cutright Sarra, The Kroger Co.
Conclusion, 3:30 p.m.
Laureate Education Inc. filed an S-1 on Friday, indicating its plans to go public. At the same time, it converted to a public benefit corporation in Delaware. According to the Baltimore Business Journal, Laureate is the world’s largest for-profit network of colleges.” With respect to Laureate’s status as a public benefit corporation, the S-1 states: “we redomiciled in Delaware as a public benefit corporation as a demonstration of our long-term commitment to our mission to benefit our students and society.” The prospectus touts that Laureate will be the first publicly traded public benefit corporation. I’m reading through the rest of the prospectus now and will post more analysis this week. . . stay tuned!
There has been a growing controversy surrounding Etsy’s much-publicized B Corp status and Etsy’s recent move to save (“dodge”???) taxes by using an Irish subsidiary. Stories have appeared in Bloomberg Business, the WSJ, and even The Irish Times. The advocacy group, Americans for Tax Fairness, requested in an August 28, 2015, letter to B Lab that Etsy’s B Corp designation be made “contingent upon its elimination of the use of its subsidiary in Ireland to dodge taxes” (emphasis added). The pressure on Etsy apparently has been so strong that Chad Dickerson, Etsy’s CEO, felt the need to publish a blog post defending the company’s tax strategy.
Today, one of the country’s leading publications for tax professionals, Tax Analysts, reported on the controversy. (See Tax Notes Today, Sept. 2, 2015.) As a result of the Tax Analysts story, we may see the broader tax community begin to comment and, perhaps, become more familiar with B Corps. According to Tax Analysts and Americans for Tax Fairness, a few already have commented—apparently supporting the notion that Etsy’s tax strategy either is inconsistent with its B Corp status or is inconsistent with one of Etsy’s core values of being “a mindful, transparent, and humane business.” Specifically:
I respectfully disagree with Americans for Tax Fairness and the sentiments of my colleagues Professors Marian and Buchanan. B Corp status is determined by a company’s score on a 200 point scale. Although I am not intimately familiar with the B Corp scoring system, I understand that only two questions pertain to a company’s tax positions: one concerns whether a company has paid any tax fines or penalties and the other relates to tax-saving strategies (the subject of the Etsy controversy). I wouldn’t think that two unfavorable answers, much less one, should disqualify a company from B Corp status.
Moreover, B Corp status does not signify perfection. B Corp status does not even signify “beyond reproach.” B Corp status merely signifies that a company scored 80 out of 200 points on B Lab’s impact assessment scale. That’s it. If you like B Lab’s scale, then maybe you like B Corps. But, if you don’t like B Lab’s scale, then you may not like B Corps. I bet Walmart does not get 80 points on B Lab’s scale; however, Walmart’s failure to qualify as a certified B Corp should not automatically lead us to the conclusion that Walmart either is “bad” or is a tax “dodger.” (Although, Americans for Tax Fairness believes that Walmart is in fact a tax dodger.) I’m not ashamed to admit that I’ve shopped at Walmart many times.
Finally, as far as I am concerned, saving taxes in compliance with applicable law is admirable. If saving taxes means “dodging” taxes, then I suppose I’m just as guilty as Etsy. Every year when I file my tax return I look for every possible deduction I can take. In fact, those deductions always include charitable contributions to causes that I feel do “good” in this world. Am I “dodging” taxes when I take a big fat deduction for those charitable contributions? If so, that’s one tax “dodge” I don’t feel “bad” about.
Granted, many companies use elaborate tax-saving techniques that comply with the letter of the law but that violate the spirit of the law or that exploit loopholes. I do not like or condone those strategies any more than Americans for Tax Fairness or my above-quoted colleagues. AND, I agree that the government needs to be vigilant about monitoring, auditing, and punishing those companies that abuse the system.
On the other hand, consider this: If enough companies become B Corps or other well-behaving corporate citizens, perhaps our need for government programs and subsidies (and thus taxes) will diminish. Imagine that! (Yes, I’m sure I’ll get plenty of push back on that last assertion.)
In any event, let’s ease off on Etsy. Don’t let the perfect be the enemy of the good. Viewed from a wider perspective, the growing social enterprise movement, which includes B Corp and other “good company” certifications, is a positive development. Saving taxes is neither inherently bad nor good and, besides, it is really the government’s job to make that call. It is entirely legitimate for a social enterprise to employ tax-saving strategies, even with an Irish subsidiary.