There is a public opinion poll for just about everything these days. I recently stumbled across a U.K. poll on corporate taxes and morality. Here we have two subjects that don't necessarily seem connected ... or are they?
In the survey 66% of respondents said tax avoidance was immoral. The poll was conducted by ComRes and commissioned by the advocacy group Christian Aid. You can read more detail about the poll here. British accountant and economist Richard Murphy further discusses the poll here.The results imply that a majority of Britons now consider lawful tax planning, aimed at minimizing a firm's effective tax rate, as crossing a moral boundary. Note that we're speaking here of (legal) tax avoidance rather than (illegal) tax evasion. Presumably the percentage of respondents who consider tax evasion immoral would be much closer to 100%.
I doubt that U.K. Prime Minister David Cameron was among those surveyed by ComRes, but we already know his views on the matter. Cameron recently said multinationals that conduct a lot of business in a country, but don't pay a lot of tax there, are lacking "moral scruples."
Ouch. That's some harsh language from the PM, but he seems to be connecting with what's on voters minds.
Let's cut to the chase. Is income shifting immoral? Is checking-the-box immoral? Is a cost-sharing agreement with your tax haven affiliate immoral? These are fair questions to ask.
Personally, I've always taken the view that if you're going to start drawing judgmental lines in the sand, the resulting distinctions should be based on legality. That appeals to my sensibility because illegal conduct is, in theory, objectively identifiable and thus avoidable. Morality not so much. If I drive my automobile 25 m.p.h. above the posted speed limit, we can all agree that I've violated the law and should be punished accordingly. But reasonable minds may differ as to whether such conduct is immoral. (Students of jurisprudence will call to mind the distinction between Malum Prohibitum and Malum In Se.) Should not the same be true of taxation?
The notion of corporate social responsibility is not without merit, but it strikes me as inherently subjective. How much tax (beyond that which is due under the law) should a company pay to the state? How does one even attempt to answer such a question? I'm all in favor of taxpayers contributing their "fair share," but we lack a reliable means of determining what exactly that means. In the absence of such a moral yardstick, the best guidepost should be what the law dictates.
The come back is obvious: Okay, but the tax law is a total disaster. Fair enough. I concede that the code and regs are a terrible mess — and often influenced by special interests. But I'm still hesitant to play the morality card. Why is that? Look no further than the dicta of Judge Learned Hand (1872-1961), as follows:
- Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands." Gregory v. Helvering, 69 F.2d 809, 810 (2d Cir. 1934), aff'd, 293 U.S. 465, 55 S.Ct. 266, 79 L.Ed. 596 (1935)
But who am I to bicker? Many will observe that case law from 1934 is not the same thing as public opinion in 2013. So let's accept the poll results, such as they are. To whom should the people of Great Britain assign blame: their corporate sector or their parliamentarians?
Moreover, do Americans share the same views on taxation and morality? What say you?