21 Sep Tax Evasion

Post at least two principles that you think are important to include in a Code of Ethics for a business to help it navigate the complex world of tax accounting and other such ethical challenges that it may face. Explain why it is useful to include these principles based on this weeks reading on Kant’s deontological theory and the consequentialist perspective of utilitarianism

Tax evasion lecture notes

Two types of ethical theories are considered to evaluate tax frauds. Kant’s deontological theory considers the principles based on which the actions were carried out and whether they can be morally justified. On the other hand Bentham’s utilitarian theory considers the consequences of the action and justifies the action based on the whether or not the consequences provided the greatest benefit to all. Economics usually uses this utilitarian viewpoint as its basis for evaluating decisions. 

So when considering tax inversion issues considered in the article using the utilitarian theory to evaluate it, we would come to the conclusion that overall it is beneficial to most people impacted by it. But on the other hand as the article shows the ethics of tax inversion based on deontological theory depends on the definition of citizen. Tax inversions would be considered unethical if thought of citizens as being from a particular country with rights and duties thereof and hence not allowed change citizenships just to reduce their taxes. But it could be considered ethical if we considered multinational corporations essentially as not the citizens of any one country.

So when considering tax fraud in general we have this option of evaluating the ethics based on these two theories and this article points out how we should go about that.