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Aggressive Tax Avoidance by Managers of Multinational Companies as a Violation of Their Moral Duty to Obey the Law: A Kantian Rationale

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  • Hansrudi Lenz

    (Julius-Maximilians University Würzburg)

Abstract

Managers of multinational companies often favour an aggressive tax avoidance strategy that pushes the legal limits onto the advantage of shareholders and the disadvantage of the spirit of democratically legitimized tax laws. The public and media debate whether such aggressive behaviour is immoral. Aggressive tax avoidance is a subset of the aggressive legal interpretations potentially observable in all fields which places little weight on the will of a democratically legitimized legislation. A thorough ethical analysis based on the deontological approach of Kant demonstrates that aggressive tax avoidance as a special case of operating on the edge of legal boundaries is potentially immoral. Applying the Kantian “contradiction of conception or will” test shows that this maxim might not be conceived or willed as a general law of nature. If all natural or legal persons aggressively interpret laws on all subjects and in every imaginable situation, then central principles of the system of law we all rely upon would be severely compromised. Therefore, aggressive tax avoidance by managers of multinational companies may violate the managers’ moral duty to obey not only the letter but also the intention or spirit of the law. The validity of the argumentation depends critically on the formulation and interpretation of the respective maxims and on assumptions about the legal system. Preserving central elements of Kantian philosophy, the article demonstrates the complexity of a philosophical argumentation which tries to justify the moral intuitions that underpin the common negative evaluation of aggressive legal strategies in business.

Suggested Citation

  • Hansrudi Lenz, 2020. "Aggressive Tax Avoidance by Managers of Multinational Companies as a Violation of Their Moral Duty to Obey the Law: A Kantian Rationale," Journal of Business Ethics, Springer, vol. 165(4), pages 681-697, September.
    • Handle: RePEc:kap:jbuset:v:165:y:2020:i:4:d:10.1007_s10551-018-4087-8
    DOI: 10.1007/s10551-018-4087-8
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    5. Cuervo-Cazurra, Alvaro & Dieleman, Marleen & Hirsch, Paul & Rodrigues, Suzana B. & Zyglidopoulos, Stelios, 2021. "Multinationals’ misbehavior," Journal of World Business, Elsevier, vol. 56(5).
    6. Robert C. Hughes, 2022. "Regulatory Entrepreneurship, Fair Competition, and Obeying the Law," Journal of Business Ethics, Springer, vol. 181(1), pages 249-261, November.
    7. Lompo, Miaba Louise & Ouoba, Marie Madeleine, 2022. "How they hide money? An investigation on tax evasion of large corporations and wealthy taxpayers," MPRA Paper 114235, University Library of Munich, Germany.
    8. Diego P. Guisande & Maretno Agus Harjoto & Andreas G. F. Hoepner & Conall O’Sullivan, 2024. "Ethics and Banking: Do Banks Divest Their Kind?," Journal of Business Ethics, Springer, vol. 192(1), pages 191-223, June.
    9. Lompo, Miaba Louise & Ouoba, Marie Madeleine, 2022. "How they hide money? An investigation on tax evasion of large corporations and wealthy taxpayers," MPRA Paper 113410, University Library of Munich, Germany.

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