Starbucks: Opposing a Local Tax to Address Homelessness while Promoting Social Justice

In 2018, the Seattle City Council unanimously voted 9-0 for a tax that would require companies whose annual revenue surpassed $20 million to pay the city $275 per employee per year. The tax money would then be used to combat homelessness in Seattle. In response, Starbucks Senior Vice President John Kelly released a statement: “There’s no reason why one of the wealthiest cities in the world should have children sleeping in cars. But the solution is not to funnel more money through a city council that has thus far failed to show it can spend it effectively.” Ultimately, Starbucks, Amazon, and other large Seattle-based companies mounted a campaign to put a tax-repeal referendum on the ballot. The controversy grew, and less than a month after unanimously approving the tax, the City Council voted 7-2 to repeal it.

Starbucks has been very public in its commitment to being socially responsible and a good citizen of the communities in which it operates, so how would customers react to the company not wanting to pay local taxes to support social initiatives?

• Accurately and thoughtfully analyze Starbucks’ stance regarding the Seattle tax.
• Describe what collaborative and constructive engagement should look like between business and government in today’s rapidly evolving economy.
• Understand how companies create externalities that may be addressed through local taxes.
• Examine the role of the corporation within society, including enlightened stakeholderism and shared value creation.
• Assess strategic, legal, and public relations implications of Starbucks’ position.