"Tax Avoidance"

So, driving home today I was listening to the BBC, who ran a story about a bunch of protestors in England, "taking the piss" (or so they say) out of big corporations who employed teams of accountants and lawyers to minimize the company's tax burden. The accountants and lawyers find sophisticated and legal schemes to avoid corporate taxes.

I'm not sure there's a legal argument to be made here, so I find myself in the morality section of sciforums. I put it to you: under what moral obligations are corporations under to avoid minimizing their tax burdens? Is it wrong for a company to minimize its tax burden, even while maintaining compliance with all federal, state, and local laws? Do you do the same? In America, the tax code can be quite complicated---in fact, certain software, which you can buy, will minimize the amount of money you have to pay in taxes...is using THIS software immoral?

 

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Depends, governments make certain things legitimate detuctions for various reasons, some are put in place to help low income earners, some are to encourage more environmentaly friendly tech, some to.encourage investments that improve the country as a whole.

Now when people and companies use these for what governments mean them for then the debate as to whether they are right or wrong. However when companies and people manipulate the system to get deductions that were never mentioned for them the yes its unethical. Its definitely unethical when people like the packers use tax havens and trusts to manipulate there income to the point they can.claim the low income earners rebate, yes it's definitely wrong

 

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Paying an income tax in the United States is immoral. It is what has led this nation to ruin. Believing and complying with the will of criminals and thieves.
Puerto Rico (Spanish for "rich port")

 

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Tax avoidance is no different than theft. If you can manipulate a situation where your theft is legal doesn't mean its moral. Just look at the land thefts from the Aboriginals, it was legal at the time but that by no means makes it moral

 

agreed.

 

Moraly they should be paying the same as everyone else pays IF the taxes were set at a certain percentage as a flat tax system would render. But that isn't the case and they then should be paying close to what everyone else is paying as possible but not unduly taxed because they are making wealth for many who work for them.

 

I didn't say it was a GOOD argument

They owe it to their shareholders to reduce their expenditures.

 

The obligation to pay taxes is a moral one only at a very abstract level. If the obligation to pay taxes were a concrete one, then you and I, as individuals, should reject any deductions the government offers us,. Hell, why not pay twice the amount owed, just to show how moral we are?

At a very generalized level we all owe a duty to each other to pay our "fair" share, but what is "fairness"? If it's not unfair for me to take the deductions allowed under law, then it should not be unfair for corporations to do so, save that I would like for corporations to pay more so that I can then pay less.

So there is a moral obligation, but only at a high and attenuated level.

At the same time, a corporation and its officers have a very direct ethical obligation to maximize profit for the benefit of the owners that have entrusted the officers wit their capital. That obligation is very clear, and the shareholders and directors watch to make sure the officers are loyal and faithful to it reasonably closely. Reducing taxes helps in that pursuit.

So finding legal ways to reduce one's tax burden does not clearly violate any duty to society and clearly does further the corporate duty to its owners. Unless the owners tell the officers that they *want* the corporation to pay more in taxes, I think a corporation's finding legal ways to reduce its tax burden is ethical. In fact, refusing to take advantage of legal means to materially reduce corporate taxes would be unethical, since it breaches the duty to the company stakeholders.

 

Let me be clear: the companies in question aren't breaking any laws. They are paying their accountants to find technically legal schemes, possible because of complicated tax codes, to minimize the amount of taxes they pay.

Ummm...Yes? I would have answered this question the exact same way, but I am surprised to hear it from you.

I guess this thread didn't lead to as much discussion as I had hoped

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I wonder if this is a case of journalists manufacturing a story that no one cares about?

 

Well, to be clear, these legal tax evasion schemes require smart accountants and lawyers, so there's a cost/benefit calculus that has to be done to engineer such tax breaks. But in general, it seems, we (all) are pretty much in agreement.

I guess people will protest anything?

 

> The corporation itself pays corporate income tax on its net profits,

If they are stupid enough to show profits. Look up Hollywood accounting, a 400 million dollars blockbuster can be shown as a moneyloser. Same with any type of corporation.

U2 the band moved its business to Holland I think to avoid high Irish taxes. Legal? Yes. Patriotic? Not so much...

Almost all major US banks have an office in Bermuda and the Bahamas for tax evasion reasons. Most of the major corporations don't pay shit into societies pockets. And the profit doesn't go into cheaper or better products, but the boardmembers' pocket...

Study says most corporations pay no U.S. income taxes:

http://www.reuters.com/article/idUSN1249465620080812

"The Government Accountability Office said 72 percent of all foreign corporations and about 57 percent of U.S. companies doing business in the United States paid no federal income taxes for at least one year between 1998 and 2005.
More than half of foreign companies and about 42 percent of U.S. companies paid no U.S. income taxes for two or more years in that period, the report said.
During that time corporate sales in the United States totaled $2.5 trillion, according to Democratic Sens. Carl Levin of Michigan and Byron Dorgan of North Dakota, who requested the GAO study."

 

Theft doesn't have to be illegal to be imoral. Let's say that you run a charity, you give out money to the poor and you base your decisions on who's poor based on what the people wear when they come to see you, now bill gates decideds to dress in rags and pretend to be poor. Nothing illegal about that but it's very immoral. Tax avoidance is no different, just because a person or company can figure out a way to legally subvert the reasons that the deductions were put in place

 

Priorities

I would suggest that shareholders are supreme, though. Customers don't always recognize that they're enjoying the lower price, since overwhelmingly more often than not they see pricies rise. To the other, though, what are they supposed to see? It sounds like the Obama jobs argument—do we really want to know how bad it could be? I'm not sure the customers would enjoy finding out.

Consumers are rarely amused by that sort of thing, you know.

However, one round of job cuts curtailing production in order to accommodate economic conditions while maintaining profit margins can hit the supplier, the employee, and the customer simultaneously. Charitable expenditure is always a viable cut to satisfy the shareholders. Wage freezes for the employees a company does actually keep reduce expenditures to the satisfaction of the shareholders. And so on, &c.

• • •​

Reality is as reality does.

Fraggle's idyll aside—although not discounting that those shiny-happy assertions of trade and finance do actually have some real effect—it all comes down to the philosophical presuppositions reflecting popular outcomes. Or, more directly, it's about priorities.

For all we hear about how trade creates jobs—a fact that could be taken to be self-evident if it wasn't beaten to death—the reality is that the operating presuppositions include that one can have their cake and eat it, too, but only if you are rich enough. Yes, ambition is important to the human species. Nature is not extraneous. But our society depends for its prosperity on illusions designed to appeal to naked greed.

Nothing ever gets done until someone figures out how to make money. Ultimately, the very ability to make money doing something rests with those who front the capital for the operation—e.g., the shareholders. The first priority, above all else, is making money.

As I see it, that's just how it goes.

The majority of people spoil their lives by an unhealthy and exaggerated altruism - are forced, indeed, so to spoil them. They find themselves surrounded by hideous poverty, by hideous ugliness, by hideous starvation. It is inevitable that they should be strongly moved by all this. The emotions of man are stirred more quickly than man's intelligence; and, as I pointed out some time ago in an article on the function of criticism, it is much more easy to have sympathy with suffering than it is to have sympathy with thought. Accordingly, with admirable though misdirected intentions, they very seriously and very sentimentally set themselves to the task of remedying the evils that they see. But their remedies do not cure the disease: they merely prolong it. Indeed, their remedies are part of the disease.

They try to solve the problem of poverty, for instance, by keeping the poor alive; or, in the case of a very advanced school, by amusing the poor.

But this is not a solution: it is an aggravation of the difficulty. The proper aim is to try and reconstruct society on such a basis that poverty will be impossible. And the altruistic virtues have really prevented the carrying out of this aim.

(Oscar Wilde)​

____________________

Notes:

Wilde, Oscar. The Sould of Man Under Socialism. 1891. Flag.Blackened.net. December 8, 2010. http://flag.blackened.net/revolt/hist_texts/wilde_soul.html

 

Because companies get nothing out of government do they? Roads, rail, power, water, phones, internet, health, trade Assistance, Police, ect

"What have the Romans ever done for us"

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ikIm always amazed at how anicasts such as yourself can ignore reality. The reality that everytime companies try to get involved in big infustructure projects they constantly go bankrupt which requires government to buy them out. The facts that the last time "private law" existed it gave us the slavery of the middle ages, and massive dictaorships. The fact that the complete break down of government and government services leaves rowanda. But maybe you could have corporate cities, because corporations would never do anything unethical without stronger government regulators keeping them in check would they.

For someone so instant on evidence and logic you are so quick to abandon it to bitch about the government *shakes head*

 

Tax avoidance is perfectly legal, tax evasion is illegal, there is a difference. Maybe you use different wording in Oz.