6 ms·

Some may consider avoiding taxes to be unethical, others might say not avoiding them would violate a fiduciary duty.

by Phlarp 10y ago

reitanqild 10y ago
From 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 ago
  The 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 ago
    Oddly enough nobody is concerned with fiduciary duty when a CEO pulls a few million dollar bonus out of a failing company.
    - ryanlol 10y ago
      The 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 ago
      The 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 ago
When 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 ago
  First 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 ago
    I'd say a 100 year old case speaks to a lack of enforcement of fiduciary duty in the courts.
    - Phlarp 10y ago
      On 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 ago
      http://www.delawarelitigation.com/uploads/file/int51%281%29.pdf http://www.delawarelitigation.com/uploads/file/int51%281%29....
      - 10y ago

Some may consider avoiding taxes to be unethical, others might say not avoiding them would violate a fiduciary duty.

by Phlarp 10y ago

Some may consider avoiding taxes to be unethical, others might say not avoiding them would violate a fiduciary duty.

From 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 ago
The 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 ago
  Oddly enough nobody is concerned with fiduciary duty when a CEO pulls a few million dollar bonus out of a failing company.
  - ryanlol 10y ago
    The 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 ago
    The 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 ago

When 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 ago
First 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 ago
  I'd say a 100 year old case speaks to a lack of enforcement of fiduciary duty in the courts.
  - Phlarp 10y ago
    On 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 ago
    http://www.delawarelitigation.com/uploads/file/int51%281%29.pdf http://www.delawarelitigation.com/uploads/file/int51%281%29....
    - 10y ago