Why tax avoidance is bad

For companies that claim to operate according to a set of ethical values and commitments, it is these values that would be expected to underpin such a statement. Some companies do address tax as an issue or commitment in their code of ethics or similar guidance. The majority only declare a commitment to avoiding illegal tax evasion and abiding by the legal requirements of the countries within which they operate.

Corporate tax avoidance will be an agenda issue at the G8 summit in June Many investing firms with a socially responsible mandate say they take account of companies' tax practices when deciding where to invest but few actually screen out companies over tax issues. Article Summary : All three multinationals have admitted to using favourable European tax jurisdictions for their UK businesses in the past. The Guardian, 9 th February British sugar giant caught in global tax scandal.

The Telegraph, 8 th January Major IT firms with government contracts accused of minimising corporation tax. Article Summary : Technology companies including IBM, Microsoft and Dell are accused of paying little or no corporation tax despite recording billions of pounds in UK profits.

Alternate access options. How does it work? Select a purchase option. Check out using a credit card or bank account with PayPal. Read your article online and download the PDF from your email or your account. Why register for an account? Access supplemental materials and multimedia. Unlimited access to purchased articles. When rich individuals or multinational corporations stash their wealth in tax havens, they can dodge paying their taxes in the countries where they do business and where they make their money.

By doing so they deprive governments of the resources they need to provide vital public services and infrastructure like schools, hospitals and roads, and to tackle poverty and inequality.

Governments either have to cut back on these services, or make up the shortfall by collecting higher taxes from everyone else. Both options see the poorest people lose out and the inequality gap grow. This global system of tax avoidance is sucking the life out of welfare states in the rich world.

When it comes to paying tax, there is one rule for the super-rich and big companies and another for ordinary people. While the most powerful get away with paying little or nothing, ordinary citizens are left to foot the bill for government spending. If we are going to end extreme inequality, we must call on world leaders to end the era of tax havens and put a stop to the secrecy that enables rich individuals and international companies to avoid paying their fair share of taxes.

Under this belief system, called consequentialism , behaviors are ethical if the outcome is beneficial to the greatest number of people, even if it comes at a cost. A third perspective comes in the shape of what is called the virtue ethical foundation that is associated with Aristotle and other Greek philosophers. In this way, ethical behavior is that which enables the individual to achieve his or her most excellent moral self. When applied to the tax avoidance strategies of individuals, each perspective offers a unique understanding of what is right.

As long as an individual follows the tax code, and acts legally, the tax avoidance strategies are likely to be viewed as ethical. In contrast, a consequentialist is likely to evaluate tax avoidance strategies by also looking at how those taxes could have been used to benefit society — by paying for schools and hospitals, for example. When one individual — be it Trump or any other person — avoids taxes, it increases the costs experienced by everyone else while also decreasing the benefits experienced by society as a whole.