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indeed! But the question is ... can tax evasion be considered an ethical violation? :)
by mk89 10y ago
indeed!
But the question is ... can tax evasion be considered an ethical violation? :)
- ryanlol 10y agoPossibly. However tax evasion and avoidance are often confused, for a public company not avoiding taxes would most certainly be an ethical violation.
- jrowley 10y agoWhile a public company answers to it's shareholders, it also has a responsibility to support the community it lives within, because often success can be directly attributed to where the company started. Aggressively avoiding taxes could very well be considered unethical by some parties.
- Phlarp 10y agoSome may consider avoiding taxes to be unethical, others might say not avoiding them would violate a fiduciary duty.
- reitanqild 10y agoFrom my very minimal accounting course I remember my teacher, who was serving as part of the tax appeals board at the time, telling us that we were allowed to use any opening in the law to save tax but we were not allowed to lie.
- Phlarp 10y agoThe intent of my comment was to draw attention to the other side of this coin. >You are allowed to use any opening in the law to save on taxes, but not lie. The other side of that is: If you (as a C(ETF)O of a company) do not use every opening in the law to save on taxes you may be violating a fiduciary duty to your shareholders.
- cmdrfred 10y agoOddly enough nobody is concerned with fiduciary duty when a CEO pulls a few million dollar bonus out of a failing company.
- ryanlol 10y agoThe CEOs don't set their comp. Also, depending on the company "a few million dollars" isn't even a meaningful amount of money.
- PeterisP 10y agoThe shareholders and board very much are, although for a failing company often they will set up a CEO with the explicit goal to wind down the company my milking it to death (which often takes many months or years, and starts long before employees would be notified about the plan) and offer multimillion bonuses conditional on extracting dozens more millions for shareholders from a dead horse by riding it in sunset until all that's left is debt to "someone else".
- deleted 10y ago[deleted]
- drumdance 10y agoWhen people bring up "fiduciary duty" in either a taxes or outsourcing context (i.e. it's Apple's fiduciary duty to build its products in China), I always ask for a pointer to a successful lawsuit in which this particular fiduciary duty was enforced. Yes, in theory it's their fiduciary duty to minimize taxes, but I've never heard of a board being sued because they didn't squeeze every last dollar out of their tax bill.
- kbenson 10y agoFirst link in the quick Google search I did, which starts with a story where Henry Ford wanted to stop paying special dividends to partial owners. "At trial, Ford testified to his belief that the company made too much money and had an obligation to benefit the public and the firm’s workers and customers." The judge did no agree. I haven't read the whole article yet, but it seems definitely to apply (and also notes there is little precedent in this area). 1: http://www.professorbainbridge.com/professorbainbridgecom/2012/05/case-law-on-the-fiduciary-duty-of-directors-to-maximize-the-wealth-of-corporate-shareholders.html http://www.professorbainbridge.com/professorbainbridgecom/20...
- rhizome 10y agoI'd say a 100 year old case speaks to a lack of enforcement of fiduciary duty in the courts.
- Phlarp 10y agoOn the other hand, "Henry Ford got smacked for it" speaks loud enough to stop most executives and their corporate lawyers from testing the waters. Even if some time has passed.
- ryanlol 10y agohttp://www.delawarelitigation.com/uploads/file/int51%281%29.pdf http://www.delawarelitigation.com/uploads/file/int51%281%29....
- 10y ago
- spacecowboy_lon 10y agoSo you are of course not taking any advantage of Pension tax reliefs in your 401K and IRA's ?
- jrowley 10y ago401K/IRA tax avoidance techniques are codified in law to encourage people to save for retirement so we don't have generations of elderly homeless people. The tax loopholes that companies like Apple tax advantage of are another thing entirely.
- ryanlol 10y ago>The tax loopholes that companies like Apple tax advantage of are another thing entirely. No, the significant ones (i.e. offshore subsidiaries) are very much codified.
- eanzenberg 10y agoBut.. what about my version of ethics! If only there were a way to take a tally of issues among groups of people with different opinions of ethics and morals..
- ryanlol 10y agoThere's a very clear fiduciary duty to pay as little money in taxes as you can, there exists no such duty to pay too much taxes. This is very black and white.
- vonmoltke 10y agoNo, it isn't. Your statement is wrong and based on a flawed interpretation of Dodge v. Ford that makes the rounds on the Internet and refuses to die.
- notacoward 10y agoThank you. Actions that are deemed to have been taken solely for their tax effects are clearly and explicitly deemed tax evasion by the IRS, and are prosecuted as such. I believe other countries have similar standards. There's a lot of room to give people the benefit of the doubt, e.g. by counting the good will from charitable activities as a credible alternate reason, but there's no license and certainly no requirement to cheat.
- ryanl0l 10y ago>Actions that are deemed to have been taken solely for their tax effects are clearly and explicitly deemed tax evasion by the IRS This is just not true.
- notacoward 10y agoHere are some citations. https://www.irs.gov/pub/irs-drop/n-14-58.pdf https://www.irs.gov/pub/irs-drop/n-14-58.pdf https://www.irs.gov/Businesses/Guidance-for-Examiners-and-Managers-on-the-Codified-Economic-Substance-Doctrine-and-Related-Penalties https://www.irs.gov/Businesses/Guidance-for-Examiners-and-Ma... Just look up "sham transaction" for plenty more. It's a very well established concept and doctrine. Nobody should be splitting hairs about avoiding vs. evading taxes, or generally pontificating about fiduciary duty, without understanding it.
- st3v3r 10y agoWhat? No it wouldn't.
- ryanlol 10y agoHave you ever heard of this concept called "fiduciary duty"?
- hguant 10y agoWell, by definition yes. Tax evasion and tax fraud are equivalent. I think you mean tax avoidance, which is quite a different matter. While there's a lot of debate on the matter, in the United States at least, the general rule of thumb was laid down in 1934, and is as follows. > Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes -- Judge Learned Hand