Wayne C. Wood

Publication Date



Until the end of the twentieth century, the predominant view in America was that a corporation’s sole duty was to supply wealth to its shareholders. The idea that a corporation owes a broader duty to all of its stakeholders has gained ground based largely on the emerging international recognition of human rights norms. Increasingly American MNCs have opted to voluntarily create and implement CSR policies for moral, economic, and political reasons. While charitable donations made to exempt organizations are expressly deductible under section 170 of the Internal Revenue Code, the same might not be true for a given CSR expenditure. In order to claim a tax deduction, a taxpayer must be able to point to a section of the Internal Revenue Code containing the magic words, “There shall be allowed as a deduction...” for the given outlay. Therefore, many American MNCs may be reluctant to proceed with a meaningful CSR program without a corresponding tax subsidy; a subsidy in the sense that a tax deduction reduces the after tax cost of a given outlay by subtracting the cost of the outlay from the taxpayer’s gross income. This note, in Part II, explains the challenges in influencing and regulating the extra-territorial acts and omissions of American MNCs and their foreign suppliers. Part III. A. discusses some of the most pressing human and labor rights abuses that are someway connected to American MNCs. Part III. B. begins the conversation of a CSR tax deduction by describing the similarities and differences of tax credits and deductions. Next, Part III. C. offers arguments for a tax deduction for money spent by American MNCs on CSR initiatives to improve human and labor rights, and environmental protection. Counter-arguments against such a deduction are considered in Part III. D. Finally Part IV. concludes the Note.