Some of the wealthiest people in the United States would pay only a small portion of the billions of dollars added to federal income tax each year, and sometimes not at all.
Investigative Journalism Outlet ProPublica It is said to have acquired a “huge cache” of information. From the Internal Revenue Service, which aims to show how long American millionaires take to avoid paying taxes.
Prominent millionaires such as Jeff Bezos, Elon Musk and Michael Bloomberg claim to provide insight into how they take advantage of “tax avoidance strategies” that are beyond the reach of the general public. I go.
There is a general public consensus on the illegality of tax evasion (the act of intentionally not paying tax obligations), but the public assesses and examines tax avoidance strategies that aim to minimize the amount paid by taxpayers. individuals through legal loopholes. There is a lot more variation in how this is done.
There is no suggestion that the millionaires in the ProPublica report did anything illegal.
Ah Opinion poll conducted just before the 2016 election We found that nearly half of Americans agree with Donald Trump, another wealthy individual who dislikes tax evasion strategies. However, two-thirds were “selfish” and 61% said “no patriotism”.
Rights and responsibilities
As an academic studying business ethics, I personally avoid taxes. Ethical foundation The ethical foundation is the principles, norms and values that guide the beliefs and actions of an individual or group. and others, loyalty, freedom, etc. – Advice on what is right, ethical, wrong and unethical.
Philosophers have discussed these ethical foundations for centuries and have broadly offered three different perspectives that are worth exploring in the context of tax avoidance strategies.
Thinker from Immanuel Kant to John Rawls Proposes what is called the dental argument. It emphasizes ethics based on respect for rules, regulations, laws and standards. Such an approach suggests that “the right thing” is defined as the most coherent of the responsibilities and obligations of an individual towards society.
Meanwhile, utilitarian philosophers like John Stuart Mill and Jeremy Bentham In pursuit of the right thing, we are raising a debate that recognizes costs and benefits, as well as tradeoffs. Under this belief system Consequentialism Action is ethical, even if it is sacrificed, if the results are beneficial to the greatest number.
The third point of view is the so-called ethical foundation of virtue associated with Aristotle and other Greek philosophers. This suggests that what is right strengthens the striving for personal virtue and moral excellence, as defined by the striving to avoid vices and to do good. So, ethical behavior is the behavior that enables an individual to achieve the best moral self.
About morals and money
When applied to an individual’s tax avoidance strategy, each perspective provides a unique understanding of why individuals believe that different things are “right”.
People who take a dental perspective can assess the tax avoidance strategies of public figures and the tax avoidance strategies of others without careful consideration. As long as an individual acts legally in accordance with tax law, tax avoidance strategies can be viewed as ethical by that individual.
In contrast, pay-for-performanceists can assess tax avoidance strategies by examining how those taxes have been used for the benefit of society, such as paying for schools and hospitals. There is. When an individual, be it a millionaire or another, avoids taxes, it increases the cost to everyone, reducing the benefits to society as a whole.
When wealthy people avoid taxes, the cost to society in terms of less funding for tax-funded programs and services is likely a higher tax burden than someone with a modest income. Therefore, pay-for-performanceists may conclude that tax avoidance strategies are unethical.
Individuals who adopt Aristotle’s virtue perspective can assess tax avoidance strategies in the context of their other virtuous behaviors.
If someone avoids taxes but gives financial support to other institutions or organizations that make sense to tax evaders and also benefit society, the right people can look at that behavior without disdain. I can do it.
For example, someone may use a tax avoidance strategy and direct some wealth to fund academic medical centers directly for cancer research. However, if the person adopts a tax avoidance strategy in the absence of other good actions, tax avoidance is considered unethical and can be rationalized.
Therefore, whether a tax avoidance strategy is viewed as ethical or unethical and rationalized may depend on the ethical basis of the person judging such behavior.
But when it comes to public figures and the ultra-rich, there are even more ethical concerns here. Public figures are valued not only by their own morals, but also by how their actions can affect others. If the ultra-rich avoid taxes, it can signal the public to do the same, and it can have greater consequences. The public often demands more of the ultra-rich – and ethics is no exception. As social leaders, these people are supposed to create a profit society by their actions. As a result, these people may be held to higher ethical standards and their behavior has come under closer scrutiny. .
Thus, the question of whether the tax avoidance strategy of the ultra-rich is “ethical” is not only the ethical basis of individuals who judge by looking at their behavior, but also that the ultra-rich benefit society. It also depends on your expectations.
This is an updated version of the first article published on October 30, 2020.
Erin Bass is Associate Professor of Business Administration at the University of Nebraska Omaha. She wrote this work conversation, The Place She First Appeared.