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Purpose Trusts: Public Good or Tax Dodge?
Patagonia has recently structured their business to be more environmentally conscious. Why?
The founder of Patagonia recently did the unthinkable: he chose to commit profits towards helping the planet. But in an article for Bloomberg (which may also be restructured into a purpose trust), Devon Pendleton and Ben Steverman point out that while the planet may benefit from the deal, Chouinard will, too: in structuring Patagonia this way, he avoided 700 million dollars in taxes. Is the deal about tax avoidance or doing something good? And if it is both, is that ok, if it incentivizes others to do the same?
To me, these questions reflect a larger issue, which is a system that allows a few people to accumulate massive amounts of wealth. There are ways to level the playing field, including employee ownership and democratizing the workplace. As business owners plan to retire in record numbers in the next decade, now is the time to incentivize them to restructure their business into something more equitable.
In a recent interview, Chouinard used a slogan now associated with Alexandria Ocasio-Cortez: “every billionaire is a policy failure.” If a few more tax breaks are the policy solution to that failure, perhaps I can get on board.