IDEAS home Printed from https://ideas.repec.org/a/kap/jbuset/v147y2018i3d10.1007_s10551-015-2978-5.html
   My bibliography  Save this article

Aggressive Tax Avoidance: A Conundrum for Stakeholders, Governments, and Morality

Author

Listed:
  • Dinah M. Payne

    (University of New Orleans)

  • Cecily A. Raiborn

    (Texas State University)

Abstract

This is the conundrum that gives rise to the issue of tax avoidance: Although governments always seem to lack sufficient funds to support the needs of society, tax codes are often written that offer “a way out” of paying taxes for some but not all constituents. The ways out are referred to as loopholes that allow taxpayers to avoid taxes. This paper first defines the basic terms of tax avoidance and tax evasion and then offers an ethical review of the morality of aggressive tax avoidance. Aggressive tax avoidance is then addressed in relationship a corporate entity’s tone at the top. The conclusion is drawn that use of the letter of the law to avoid payment of taxes sorely needed by governments for the good faith provision of public goods and services is ethically unacceptable. Several suggestions for change are provided, including a new financial statement disclosure and the possibility of a published corporate ethics report.

Suggested Citation

  • Dinah M. Payne & Cecily A. Raiborn, 2018. "Aggressive Tax Avoidance: A Conundrum for Stakeholders, Governments, and Morality," Journal of Business Ethics, Springer, vol. 147(3), pages 469-487, February.
    • Handle: RePEc:kap:jbuset:v:147:y:2018:i:3:d:10.1007_s10551-015-2978-5
    DOI: 10.1007/s10551-015-2978-5
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10551-015-2978-5
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s10551-015-2978-5?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Kirchler, Erich & Maciejovsky, Boris & Schneider, Friedrich, 2003. "Everyday representations of tax avoidance, tax evasion, and tax flight: Do legal differences matter?," Journal of Economic Psychology, Elsevier, vol. 24(4), pages 535-553, August.
    2. Reckers, Philip M.J. & Sanders, Debra L. & Roark, Stephen J., 1994. "The Influence of Ethical Attitudes on Taxpayer Compliance," National Tax Journal, National Tax Association;National Tax Journal, vol. 47(4), pages 825-836, December.
    3. Goodman, Steven E., 1978. "Quality of life: The role of business," Business Horizons, Elsevier, vol. 21(3), pages 36-37, June.
    4. Steven Shavell, 2002. "Law versus Morality as Regulators of Conduct," American Law and Economics Review, American Law and Economics Association, vol. 4(2), pages 227-257.
    5. Howell H Zee & Vito Tanzi, 2001. "Tax Policy for Developing Countries," IMF Economic Issues 27, International Monetary Fund.
    6. Slemrod, Joel & Yitzhaki, Shlomo, 2002. "Tax avoidance, evasion, and administration," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 22, pages 1423-1470, Elsevier.
    7. Prem Sikka, 2010. "Smoke and mirrors: Corporate social responsibility and tax avoidance," Accounting Forum, Taylor & Francis Journals, vol. 34(3-4), pages 153-168, September.
    8. Robert McGee, 2006. "Three Views on the Ethics of Tax Evasion," Journal of Business Ethics, Springer, vol. 67(1), pages 15-35, August.
    9. Rebelo, Sergio, 1991. "Long-Run Policy Analysis and Long-Run Growth," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 500-521, June.
    10. Alfons Weichenrieder, 1996. "Fighting international tax avoidance," Fiscal Studies, Institute for Fiscal Studies, vol. 17(1), pages 37-58, February.
    11. Sikka, Prem, 2010. "Smoke and mirrors: Corporate social responsibility and tax avoidance," Accounting forum, Elsevier, vol. 34(3), pages 153-168.
    12. Reckers, Philip M.J. & Sanders, Debra L. & Roark, Stephen J., 1994. "The Influence of Ethical Attitudes on Taxpayer Compliance," National Tax Journal, National Tax Association, vol. 47(4), pages 825-36, December.
    13. Mr. Vito Tanzi & Mr. Howell H Zee, 2001. "Tax Policy for Developing Countries," IMF Economic Issues 2001/001, International Monetary Fund.
    14. Elaine Doyle & Jane Frecknall Hughes & Barbara Summers, 2013. "An Empirical Analysis of the Ethical Reasoning of Tax Practitioners," Journal of Business Ethics, Springer, vol. 114(2), pages 325-339, May.
    15. William E. Shafer & Richard S. Simmons, 2008. "Social responsibility, Machiavellianism and tax avoidance," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 21(5), pages 695-720, June.
    16. Robert McGee & Simon Ho & Annie Li, 2008. "A Comparative Study on Perceived Ethics of Tax Evasion: Hong Kong Vs the United States," Journal of Business Ethics, Springer, vol. 77(2), pages 147-158, January.
    17. Larry E. Jones & Rodolfo Manuelli, 1990. "A Convex Model of Equilibrium Growth," NBER Working Papers 3241, National Bureau of Economic Research, Inc.
    18. Jones, Larry E & Manuelli, Rodolfo E, 1990. "A Convex Model of Equilibrium Growth: Theory and Policy Implications," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 1008-1038, October.
    19. Elaine Doyle & Jane Frecknall-Hughes & Barbara Summers, 2014. "Ethics in Tax Practice: A Study of the Effect of Practitioner Firm Size," Journal of Business Ethics, Springer, vol. 122(4), pages 623-641, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Francesco Scarpa & Silvana Signori, 2023. "Understanding corporate tax responsibility: a systematic literature review," Sustainability Accounting, Management and Policy Journal, Emerald Group Publishing Limited, vol. 14(7), pages 179-201, June.
    2. Päivi Karhunen & Svetlana Ledyaeva & Keith D. Brouthers, 2022. "Capital Round-Tripping: Determinants of Emerging Market Firm Investments into Offshore Financial Centers and Their Ethical Implications," Journal of Business Ethics, Springer, vol. 181(1), pages 117-137, November.
    3. Darius Fatemi & John Hasseldine & Peggy Hite, 2020. "The Influence of Ethical Codes of Conduct on Professionalism in Tax Practice," Journal of Business Ethics, Springer, vol. 164(1), pages 133-149, June.
    4. Oussama Ouriemmi, 2023. "The Legalistic Organizational Response to Whistleblowers’ Disclosures in a Scandal: Law Without Justice?," Journal of Business Ethics, Springer, vol. 188(1), pages 17-35, November.
    5. Hyejin Cho, 2020. "Sustainable Tax Behavior of MNEs: Effect of International Tax Law Reform," Sustainability, MDPI, vol. 12(18), pages 1-13, September.
    6. Sacco, Pier Luigi & Arenas, Alex & De Domenico, Manlio, 2023. "The political economy of big data leaks: Uncovering the skeleton of tax evasion," Chaos, Solitons & Fractals, Elsevier, vol. 168(C).
    7. Lisa Baudot & Joseph A. Johnson & Anna Roberts & Robin W. Roberts, 2020. "Is Corporate Tax Aggressiveness a Reputation Threat? Corporate Accountability, Corporate Social Responsibility, and Corporate Tax Behavior," Journal of Business Ethics, Springer, vol. 163(2), pages 197-215, May.
    8. Inga Hardeck & J. William Harden & David R. Upton, 2021. "Consumer Reactions to Tax Avoidance: Evidence from the United States and Germany," Journal of Business Ethics, Springer, vol. 170(1), pages 75-96, April.
    9. Ziliang Deng & Jiayan Yan & Pei Sun, 2020. "Political Status and Tax Haven Investment of Emerging Market Firms: Evidence from China," Journal of Business Ethics, Springer, vol. 165(3), pages 469-488, September.
    10. Muhammad Syukur & Marziana Madah Marzuki & Maheran Zakaria, 2022. "Ownership Structure and Tax Avoidance in Asia: a Systematic Literature Review and a Research Agenda," Journal of Tax Reform, Graduate School of Economics and Management, Ural Federal University, vol. 8(2), pages 170-185.
    11. Jorge Matute & José Luis Sánchez-Torelló & Ramon Palau-Saumell, 2021. "The Influence of Organizations’ Tax Avoidance Practices on Consumers’ Behavior: The Role of Moral Reasoning Strategies, Political Ideology, and Brand Identification," Journal of Business Ethics, Springer, vol. 174(2), pages 369-386, November.
    12. Doyle, Elaine & Frecknall-Hughes, Jane & Summers, Barbara, 2022. "Ethical reasoning in tax practice: Law or is there more?," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 48(C).
    13. Junjian Gu, 2022. "Country Portfolio and Taxation: Evidence from Japan," Journal of Business Ethics, Springer, vol. 175(3), pages 583-607, January.
    14. Prianto Budi Saptono & Gustofan Mahmud & Intan Pratiwi & Dwi Purwanto & Ismail Khozen & Lambang Wiji Imantoro & Maria Eurelia Wayan, 2024. "Book-Tax Differences during the Crisis: Does Corporate Social Responsibility Matter?," Sustainability, MDPI, vol. 16(17), pages 1-38, August.
    15. Athira, A. & Ramesh, Vishnu K., 2023. "COVID-19 and corporate tax avoidance: International evidence," International Business Review, Elsevier, vol. 32(4).
    16. De Widt, Dennis & Oats, Lynne, 2024. "Imagining cooperative tax regulation: Common origins, divergent paths," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 99(C).
    17. Christofer Adrian & Mukesh Garg & Anh Viet Pham & Soon-Yeow Phang & Cameron Truong, 2023. "Do Natural Disasters Affect Corporate Tax Avoidance? The Case of Drought," Journal of Business Ethics, Springer, vol. 186(1), pages 105-135, August.
    18. Raitasuo, Santtu, 2024. "The conflict of interest in tax scholarship," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 99(C).
    19. Nadia Elouaer & Rida Waheed & Suleman Sarwar & Ghazala Aziz, 2022. "Does Gender Diversity and Experience Moderate the Impact of Tax Aggressiveness on Corporate Social Responsibility: A Study of UAE Listed Companies," Sustainability, MDPI, vol. 14(21), pages 1-13, November.
    20. Hernandez, Ariel, 2021. "SDG-aligned futures and the governance of the transformation to sustainability reconsidering governance perspectives on the futures we aspire to," IDOS Discussion Papers 30/2021, German Institute of Development and Sustainability (IDOS).
    21. He, Feng & Liu, Guanchun & Hao, Jing & Li, Youwei, 2023. "CSR performance and firm idiosyncratic risk in a data-rich environment: The role of retail investor attention," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 89(C).
    22. BENKRAIEM, Ramzi & GAAYA, Safa & LAKHAL, Faten, 2024. "Tax avoidance, investor protection, and investment inefficiency: An international evidence," Research in International Business and Finance, Elsevier, vol. 69(C).
    23. Scherer Anna-Lena & Schmiel Ute, 2021. "Ethical and Legal Responsibility of Multinational Corporate Groups for a Fair Share of Taxes," Nordic Tax Journal, Sciendo, vol. 2021(1), pages 32-46, October.
    24. Mayer, Maryse & Gendron, Yves, 2024. "The media representation of LuxLeaks: A window onto the normative dynamics of tax avoidance from a socio-legal perspective," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 99(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Otusanya, Olatunde Julius, 2011. "The role of multinational companies in tax evasion and tax avoidance: The case of Nigeria," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 22(3), pages 316-332.
    2. Elaine Doyle & Jane Frecknall-Hughes & Barbara Summers, 2014. "Ethics in Tax Practice: A Study of the Effect of Practitioner Firm Size," Journal of Business Ethics, Springer, vol. 122(4), pages 623-641, July.
    3. Apostol, Oana & Pop, Alina, 2019. "‘Paying taxes is losing money’: A qualitative study on institutional logics in the tax consultancy field in Romania," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 58(C), pages 1-23.
    4. Gebhard Kirchgässner, 2011. "Tax Morale, Tax Evasion and the Shadow Economy," Chapters, in: Friedrich Schneider (ed.), Handbook on the Shadow Economy, chapter 10, Edward Elgar Publishing.
    5. van de Klundert, T.C.M.J. & Smulders, J.A., 1991. "Reconstructing growth theory : A survey," Other publications TiSEM 19355c51-17eb-4d5d-aa66-b, Tilburg University, School of Economics and Management.
    6. Fábio Pereira Silva & Reinaldo Guerreiro & Eduardo Flores, 2019. "Voluntary versus enforced tax compliance: the slippery slope framework in the Brazilian context," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 66(2), pages 147-180, June.
    7. V. V. Chari & Patrick J. Kehoe & Ellen R. McGrattan, 1996. "The Poverty of Nations: A Quantitative Exploration," NBER Working Papers 5414, National Bureau of Economic Research, Inc.
    8. Posch, Olaf, 2009. "Structural estimation of jump-diffusion processes in macroeconomics," Journal of Econometrics, Elsevier, vol. 153(2), pages 196-210, December.
    9. Wilson, E.J. & Chaudhri, D.P., 2000. "Endogeneity, Knowledge and Dynamics of Long Run Capitalist Economic Growth," Economics Working Papers wp00-03, School of Economics, University of Wollongong, NSW, Australia.
    10. Alfò, Marco & Carbonari, Lorenzo & Trovato, Giovanni, 2023. "On the effects of taxation on growth: an empirical assessment," Macroeconomic Dynamics, Cambridge University Press, vol. 27(5), pages 1289-1318, July.
    11. Turnovsky, S., 2000. "Growth in an Open Economy: some Recent Developments," Papers 5, Warwick - Development Economics Research Centre.
    12. Eric W. Bond & Kathleen Trask & Ping Wang, 2003. "Factor Accumulation and Trade: Dynamic Comparative Advantage with Endogenous Physical and Human Capital," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(3), pages 1041-1060, August.
    13. Jones, Larry E. & Manuelli, Rodolfo E., 1995. "Growth and the effects of inflation," Journal of Economic Dynamics and Control, Elsevier, vol. 19(8), pages 1405-1428, November.
    14. Miao, Jianjun & Xie, Danyang, 2013. "Economic growth under money illusion," Journal of Economic Dynamics and Control, Elsevier, vol. 37(1), pages 84-103.
    15. Alvarez, Fernando & Stokey, Nancy L., 1998. "Dynamic Programming with Homogeneous Functions," Journal of Economic Theory, Elsevier, vol. 82(1), pages 167-189, September.
    16. Tom Krebs & Moritz Kuhn & Mark Wright, 2016. "Insurance in human capital models with limited enforcement," CAMA Working Papers 2016-48, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    17. Giuseppe Freni, 2016. "Order of resource extraction and factor intensity," Discussion Papers 3_2016, CRISEI, University of Naples "Parthenope", Italy.
    18. Sedat Alataş & Erkam Sarı, 2021. "An Empirical Investigation on Regional Disparities in Public Expenditures: Province Level Evidence from Turkey," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 158(1), pages 217-240, November.
    19. AnnMarie Bennett & Breda Murphy, 2017. "The Tax Profession: Tax Avoidance and the Public Interest," Economics Department Working Paper Series n286-17.pdf, Department of Economics, National University of Ireland - Maynooth.
    20. repec:ebl:ecbull:v:2:y:2002:i:1:p:1-15 is not listed on IDEAS
    21. Marcelo Bianconi & Walter H. Fisher, 2014. "Intertemporal Budget Policies and Macroeconomic Adjustment in Indebted Open Economies," Review of International Economics, Wiley Blackwell, vol. 22(1), pages 116-130, February.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:jbuset:v:147:y:2018:i:3:d:10.1007_s10551-015-2978-5. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.