Ethics of tax planning

[CountDeMoney]

Binary my ass. If it was that simple, they wouldn't have entire law firms doing nothing but figuring out how to help the wealthy not pay taxes.

All the more hilarious considering Marti's law firm pretty much does exactly that in Murders & Acquisitions.

Only because something is not obvious to a layman it does not mean it is not binary.

There are many things we do not know yet about the universe, and which require considerable research to determine. It does not mean there is no objective truth either.

Lawyers shouldn't bring up "objective truth".  It's unseemly and facetious.

[alfred russel]

I think that is a fair assessment of my position. If nothing else, it is refreshing to see someone disagree with someone without the need to strawman their position.

My argument is that tax codes are not "special" laws that exist in any manner that is different from any other laws, and just like other laws, there are plenty of things that could be legal that are not ethical.

There is no way to assess what is a "fair" amount of tax to pay other than following the rules as they are written. It isn't hard to imagine the current tax regime restructured so that corporate taxes are very low and the lost tax revenue recovered through higher personal income taxes on high earners. In that case, is it unethical for corporations to not pay much in terms of tax? What if the taxes aren't even offset, and President Trump decides to slash corporate tax rates super low, not through a rate change, but a plethora of deductions?

When you put together all the laws, regulations, and relevant case law that make up our tax system, you might be talking about millions of pages. It is highly complex. It has more rationality to it than many give it credit for, but it isn't completely rationally constructed either. A lot of the structures that sound highly dubious at first mention are common business practice that are known about and/or enabled by legislators who want businesses in their jurisdictions to be advantaged.

[alfred russel]

Berkut is in part arguing that certain legal tax positions are unethical. I'm disputing that. and that alone.

You're a CPA, right, Dorsey?  Should I understand from this that there is nothing in your code of professional ethics concerning taxes beyond what the law states?

Same question to Martinus, or any other lawyer who does tax work.

I am a CPA, but I do financial accounting and not tax work (though I work closely with tax people to financially account for what they are doing).

I don't think there is anything in the professional ethics to prevent signing off on a tax return that meets legal requirements, though this isn't something I do so it isn't something I worry about.

[grumbler]

I think that is a fair assessment of my position. If nothing else, it is refreshing to see someone disagree with someone without the need to strawman their position.

My argument is that tax codes are not "special" laws that exist in any manner that is different from any other laws, and just like other laws, there are plenty of things that could be legal that are not ethical.

I don't think the division is between tax laws and "any other laws."  There are laws that have ethical components and laws that do not.  Speed laws, or vehicle registration laws, are examples of the latter.  They exist only because they provide a necessary regulation under a system of laws, and some places don't even have them (places without cars).    I'd argue that tax laws fall into the latter category.  If you don't have taxes, you don't need the laws.  If you do have such laws, then they are obeyed for coercive reasons, not ethical ones.  No one has a moral obligation to drive slower than the speed limit demands, nor to pay more taxes than are required.

[crazy canuck]

I think that is a fair assessment of my position. If nothing else, it is refreshing to see someone disagree with someone without the need to strawman their position.

My argument is that tax codes are not "special" laws that exist in any manner that is different from any other laws, and just like other laws, there are plenty of things that could be legal that are not ethical.

I don't think the division is between tax laws and "any other laws."  There are laws that have ethical components and laws that do not.  Speed laws, or vehicle registration laws, are examples of the latter.  They exist only because they provide a necessary regulation under a system of laws, and some places don't even have them (places without cars).    I'd argue that tax laws fall into the latter category.  If you don't have taxes, you don't need the laws.  If you do have such laws, then they are obeyed for coercive reasons, not ethical ones.  No one has a moral obligation to drive slower than the speed limit demands, nor to pay more taxes than are required.

I think that is too simplistic.  Tax compliance is largely voluntary for most people.  Coercive reasons are not a particularly big motivator for most people.  That changes substantially which we get into the area of corporate tax structures.  In that area it is very much the way you have described it.

[dps]

I think that is a fair assessment of my position. If nothing else, it is refreshing to see someone disagree with someone without the need to strawman their position.

My argument is that tax codes are not "special" laws that exist in any manner that is different from any other laws, and just like other laws, there are plenty of things that could be legal that are not ethical.

I don't think the division is between tax laws and "any other laws."  There are laws that have ethical components and laws that do not.  Speed laws, or vehicle registration laws, are examples of the latter.  They exist only because they provide a necessary regulation under a system of laws, and some places don't even have them (places without cars).    I'd argue that tax laws fall into the latter category.  If you don't have taxes, you don't need the laws.  If you do have such laws, then they are obeyed for coercive reasons, not ethical ones.  No one has a moral obligation to drive slower than the speed limit demands, nor to pay more taxes than are required.

I think that is too simplistic.  Tax compliance is largely voluntary for most people.  Coercive reasons are not a particularly big motivator for most people.  That changes substantially which we get into the area of corporate tax structures.  In that area it is very much the way you have described it.

If there was no coercive element at all to income taxes, hardly anyone in the US would pay anything in income tax.

I agree with grumbler on this;  what he posted is basically the same thing I posted earlier, just worded differently.  Most of us have a moral code of some sort that tells us not rape women or to run over pedestrians for kicks, even if there weren't laws against that sort of thing (I hope so anyway).  We don't have a moral code that tells us to drive no more than a certain arbitrary speed on a given stretch of road or to give our money to the government.  We only do so because there are laws that compel us to do so.

[DGuller]

Is it ethical to use a loophole, that you know shouldn't have been there, to avoid military draft during a major war?

[DGuller]

No one has a moral obligation to drive slower than the speed limit demands, nor to pay more taxes than are required.

You don't have a moral obligation to not put other people in danger?

[alfred russel]

I think that is too simplistic.  Tax compliance is largely voluntary for most people.  Coercive reasons are not a particularly big motivator for most people.  That changes substantially which we get into the area of corporate tax structures.  In that area it is very much the way you have described it.

That is why I've focused on corporate tax. However, coercive reasons are I still think a major motivator on personal returns. I suspect the tax compliance for bartenders, waiters, and waitresses is extremely low, while probably quite high for salaried people in a corporation. If employers were not mandated to report salary information and withhold taxes, I bet compliance would plummet.

[alfred russel]

Is it ethical to use a loophole, that you know shouldn't have been there, to avoid military draft during a major war?

Assuming the war is just and necessary, no.

[Ed Anger]

Is it ethical to use a loophole, that you know shouldn't have been there, to avoid military draft during a major war?

Dying is for poors.

*puts a toaster strudel in toaster*

[DGuller]

Is it ethical to use a loophole, that you know shouldn't have been there, to avoid military draft during a major war?

Assuming the war is just and necessary, no.

So substitute life for property, and how is this different to tax obligations?

[grumbler]

No one has a moral obligation to drive slower than the speed limit demands, nor to pay more taxes than are required.

You don't have a moral obligation to not put other people in danger?

Thanks.  I needed an example of a non sequitur for my students, and this is a textbook example of one.

[grumbler]

I agree with grumbler on this;  what he posted is basically the same thing I posted earlier, just worded differently. 

I should have pointed out that you had made this argument earlier and that I was agreeing with it.  Sorry. 

[Monoriu]

Is it ethical to use a loophole, that you know shouldn't have been there, to avoid military draft during a major war?

It is not up to the taxpayer to determine which is a loophole and which isn't.  If there are loopholes, then it is the responsibility of the lawmakers to close them.  The taxpayers' responsibility is to pay taxes as required under the tax code.