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

by: Andrew Hoffman

Publication Date: March 31, 2021
Length: 19 pages
Product ID#: 3-330-494

Core Disciplines: Economics, Social Impact, Strategy & Management, Sustainability

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Teaching Note

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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?

Teaching Objectives

After reading and discussing the material, students should:

  • 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.