Just Pay It

This morning I read that Nike Inc has made a $40 million commitment over the next four years to support the Black community in the U.S. on behalf of the Nike, Jordan, and Converse brands collectively. Then another statement on behalf of Michael Jordan and the Jordan brand announcing a donation of $100 million over the next 10 years to organisations dedicated to ensuring racial equality, social justice, and greater access to education.

This was Nike’s corporate response to the shocking death of George Floyd. But all that glitters is not gold.

About a year ago, President Donald Trump in an interview with Fox News said: “You have a woman in Europe, I won’t mention her name, she hates the United States, perhaps worse than any person I’ve ever met.”

He was describing The European Union’s Danish competition chief Margrethe Vestager. The reason for this venomous statement was that she had provisionally concluded that US company Nike had paid too little tax in the Netherlands — the sportswear giant’s most important base outside the United States — for 14 years.

Vestager’s interim findings followed the publication of the so-called Paradise Papers, a leak of offshore documents shared with media outlets around the world.

The contents included revelations of Nike’s tax affairs and how the company had been using legal tax avoidance loopholes by pooling its income from across Europe in the Netherlands, before transferring about a billion dollars a year, tax-free, to another Nike unit in the North Atlantic tax haven of Bermuda.

If the findings of Verstager are upheld, it could ultimately cost Nike more than a billion dollars in back taxes. Nike themselves put out a statement saying, “We believe the European Commission’s investigation is without merit.”

It is unfair that people in different social circumstances or who live in minority communities experience avoidable differences in health, education, employment, and length of life. To lead flourishing lives, people need a fair society. Societal reform can only be achieved through committed and well-funded governmental policies of social mobility. However, this comes at a substantial cost to the public purse and the only way of paying for this is via taxation.

Many brands and organisations like Nike have quickly mobilised to make statements about inequality and pledging money to address social injustice. But the irony is that these companies might actually be a big part of the problem.

In my view, if Nike truly wants to ensure social justice, equality, and greater access to education, then their political corporate social responsibility should be to stop avoiding tax and ‘For Once, Just Pay It’.