Tuesday, May 4, 2010

CSR Hero: Jeffrey Hollender “Tax Me More!”

Although reluctant to award Jeffrey Hollender any more credit than he already receives in droves, his most recent initiative is charming. Hollender teamed with other millionaires and have been organized by a group called United for a Fair Economy to advocate for higher taxes on the wealthy- taxes that they would be subject to pay. The group is especially persuasive in requests to Congress to repeal the Bush era tax cuts for Americans making more than $250,000, since they are Americans making more than $250,000. The move signals an awareness of corporate social responsibility growing in wealthy Americans, in and outside the office.

Prior to this time, c-level management has been almost certainly anti-tax, and has lobbied accordingly, and aggressively to keep taxes down. This new movement is completely unique. Apparently Hollender isn’t the only one who minds raising taxes… according to the Washington Post quoting United for a Fair Economy executive director Brian Miller, almost 65% of Americans making over $250,000 a year would not oppose higher taxes on themselves.

Whether moved by guilt over inherited wealth or being born into entitlement, or by some other compulsion, the millionaires’ request for more taxes does point to a fundamental inequity in American tax law. Though called “progressive”, the tax code costs those making less a larger proportion of their income. For example, people making $40,000/year will feel the impact of $3000 in taxes more acutely than someone making $2 million year who is taxed $30000 (not to imply these are their tax rates; both are probably paying at least double what I suggested).

Secondly, unearned income such as capital gains enjoys a much lower tax rate than wages do. In this way, working people pay more, and investors pay less, perpetuating the logical trend that the investment-class will grow wealth at a faster rate than the working-class will. This, combined with the fact that every basis point of tax costs the non-millionaire more, literally and figuratively, creates a system that is unfair on its face. The idea behind this tax type of tax treatment was to incentivize investment; whether investment really needs incentives more than workers need to be able to keep more of their paycheck is a question worth revisiting. Would Wall St. break down under a higher capital gains tax? Where can I place bets for absolutely not?

CSR does not end with the workday. While it’s great to see companies increasingly adopting CSR strategies, policies, and changes business processes- strike that- while it’s awesome to see companies adopting more CSR strategy, it is even better to see management internalize the CSR principles in their daily lives. Corporate social responsibility is greatly influenced by CEO leadership and personal fortitude; company ethics and culture are administered from the top. Thus when c-level management can reform personal priorities for the public interest, it becomes much more likely that they will align their professional lives with CSR as well.

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