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Über dieses Buch

This book does not present a single philosophical approach to taxation and ethics, but instead demonstrates the divergence in opinions and approaches using a framework consisting of three broad categories: tax policy and design of tax law; ethical standards for tax advisors and taxpayers; and tax law enforcement.
In turn, the book addresses a number of moral questions in connection with taxes, concerning such topics as:
• the nature of government • the relation between government (the state) and its subjects or citizens • the moral justification of taxes• the link between property and taxation• tax planning, evasion and avoidance • corporate social responsibility• the use of coercive power in collecting taxes and enforcing tax laws • ethical standards for tax advisors • tax payer rights • the balance between individual rights to liberty and privacy, and government compliance and information requirements • the moral justification underlying the efforts of legislators and policymakers to restructure society and steer individual and corporate behavior.



Chapter 1. Introduction: Why Ethics Matter in Taxation

This chapter is the introduction to the book and provides an overview of the content of each chapter within the framework of a general, but necessarily short, theoretical treatise on the interaction of morality and taxation, touching topics such as the philosophical justification of taxes, the obligation to pay and the morality of tax avoidance and planning, voluntary compliance, and tax law enforcement and its ethical challenges. It provides context to the individual chapters, places footnotes by positions taken and shows alternative perspectives.
Robert F. van Brederode

Tax Policy and Design of Tax Law


Chapter 2. The Moral Basis for Taxation

This chapter attempts to consider some of the major moral issues involved in the imposition of taxation. It assumes prima facie that the rationale nowadays for a government imposing taxation derives from its responsibility to raise revenue for providing public goods, redistributing income/wealth to those who are in need or less well-off, promoting social and economic welfare, promoting economic stability, and creating a sound infrastructure for the development of business; and possibly, promoting fiscal harmonisation with other countries. These ideas suggest that the provision of public goods and services paid for by tax revenue inherently constitutes the moral basis for imposing taxation. The chapter goes on to examine definitions of ‘tax’ and ‘morality’, noting the development of morality as concept that changes over time, often subject to increased scientific knowledge, and continues by considering in depth the link between property and taxation, examining property rights, the concept of the ‘social contract’ and natural rights, the meaning of private property, and the idea of ‘tax as theft’—looking at in this latter context the ideas of St. Augustine and St. Thomas Aquinas, together with libertarian and counter-libertarian arguments. The chapter then considers further the moral underpinning for the process of raising taxes and their use, examining in detail the ideas of Green (J Religious Ethics 12(2):146–161, 1984). The final sections offer some other possible viewpoints and concluding remarks.
Jane Frecknall-Hughes

Chapter 3. Social Contract and Beyond: Sociability, Reciprocity and Tax Ethics

Paying taxes, as determined by the legislature, is a moral obligation owed by members of a community to their community. Question is whether paying taxes has become an exclusively legal affair: a legal obligation towards the state, replacing a moral obligation towards society. This chapter tries to find an answer to that question by analysing social contract theorists and their critics. Social contract theorists and their critics searched for principles underlying a viable civil polity. Hobbes, Spinoza and Hume focused on political and legal authority and obedience; grounding their theories on various ideas regarding human motivations and human sociability. These different starting points resulted in diverging conceptions of the reciprocal relationships between ruler and subjects and between subjects and fellow subjects. We will show the consequences thereof for the relationship between tax law and morality. Different conceptions of the reciprocal relationships involved may invite behaviour varying from minimalist compliance to a more liberal compliance with tax law. Taxpayers facing absolute sovereignty may adopt a legalistic attitude relying on the letter of the law or exploiting loopholes rather than stay within the spirit of applicable tax legislation.
Hans Gribnau, Carl Dijkstra

Chapter 4. Libertarian Perspectives on the Ethics of Taxation

We provide a survey of significant libertarian contributions to the discussion surrounding ethics and taxation. By significant contributions, we mean those which have exerted a strong influence both on libertarianism, popular and academic, and on political and ethical discourse more broadly. Our discussion centers on the work of three prominent libertarians: Robert Nozick, Ayn Rand, and Murray Rothbard. For each, we present his or her position concerning some ethical aspect of taxation and evaluate objections to it. Section 4.2 discusses Nozick’s analogy between taxation of labor from earnings and forced labor and applies his argument against the fairness principle to fairness-based justifications of such taxation. Section 4.3 focuses on Rand’s view that compulsory taxation as such is unjust and considers her proposed scheme of voluntarily-funded minimal government. We argue that she failed to convincingly argue for either the feasibility or desirability of the latter. Section 4.4 addresses Rothbard’s similar position concerning the injustice of taxation per se and defends his view against possible justifications of that institution.
Walter E. Block, Christian Torsell

Chapter 5. Head, Proportional, or Progressive Taxation: An Evaluation Based on Jewish and Christian Ethics

Following a theoretical prologue that seeks to define and critically understand the moral logics that support head, proportionate and progressive taxation, I examine the presence of each of these taxing options in Jewish and Christian thinking. Beginning with the Hebrew Bible this examination proceeds to the texts and practices of classical (Talmudic) Judaism, the Christian New Testament, and the later Jewish, Roman Catholic, and Protestant teachings that derive from these key textual resources. I conclude that while there are significant differences within and between these traditions, and while each type of taxation has a presence, the advocacy of progressive taxation as a means of serving the least-off members of society and promoting social equality and opportunity is a leitmotif of the biblically informed religious traditions.
Ronald M. Green

Chapter 6. Developing Moral Standards for Taxation

Decisions regarding the proper levels and forms of taxation are not merely questions of economics. Instead, taxation should be seen as the manifestation of a nation’s philosophical ideals of distributive justice. As such, legislators must consider the underlying philosophical beliefs of their constituents in determining the tax laws. Those philosophical beliefs should then inform decisions regarding the form those taxes should take, and amount of tax that the government should impose. This Chapter considers a variety of political philosophical positions that are common in contemporary societies, and then evaluates how a legislator might incorporate those views into the creation of a system of tax laws that properly reflect those political perspectives. In order to consider these issues in a variety of circumstances, this Chapter contemplates the philosophical positions of libertarianism, political liberalism, and utilitarianism, and then thinks through how each of these positions would apply to the creation of a variety of tax laws, including sales taxes, property taxes, wealth taxes, and income taxes. Rather than being an exhaustive analysis of the development of moral standards for taxation, this Chapter is meant to be an example of how a legislator could go about developing such standards in her own particular circumstances.
Jennifer Bird-Pollan

Chapter 7. Global Tax Justice: Who’s Involved?

This chapter deals with the question why international institutions of global tax governance will fail to produce legitimate decisions when non-state actors, including NGO’s, are not somehow involved in the decision-making processes of these institutions. It researches this question with the help of an analysis of the prescriptive legitimacy of international institutions in two competing models of global tax governance: the intergovernmental model of democratic states and the model of cosmopolitan pluralism. These models differ with regard to the relationship between the international institutions and the states (i.e. instrumental or no pre-eminence for one of both) and with regard to the role of non-state actors in the decision-making processes (whether or not there is such involvement). The normative right to rule of the institutions in both models is tested against their potential to establish truly democratic national taxing systems in the states that implement these decisions. The analysis in this chapter leads to the conclusion that the current institutional framework of the BEPS project of the OECD, but also the position defended by Dietsch and Rixen, and Dagan, cannot be regarded as a sufficiently legitimate form of global tax governance. The chapter subsequently makes clear why the only way to create a more democratic form of global tax governance is therefore to appreciate the ability of non-state actors to put external pressure on states. In this regard it sets out a roadmap for further research about this topic.
Cees Peters

Ethical Standards and Obligations for Tax Advisors and Taxpayers


Chapter 8. Taxpayers’ Subjective Concepts of Taxes, Tax Evasion, and Tax Avoidance

The motivation to comply or not to comply is considerably influenced by beliefs, attitudes, and social representations of taxpayers. These subjective conceptualizations and evaluations are often not objective or true, but they determine how citizens construct their subjective reality. Attitudes, judgments, and behavior intentions eventually shape people’s behavior which is often more affected by what they think than by what actually is. We first explain what social representations are, how they are related to individual attitudes, and to what extent both social representations and attitudes shape behavior according to the existing psychological literature. In the following section we present three of our own studies on taxpayers’ social representations of taxes and their attitudes towards tax evasion and tax avoidance. These empirical studies identify relevant differences in attitudes between different occupation groups: Self-employed entrepreneurs express less favorable views on taxes and the tax authorities and as a result feel more restricted and hindered in their work, while employed workers focus stronger on the exchange function between tax payments and the resulting provision of public goods. Despite the differences, in all occupation groups tax evasion is not perceived as a severe crime and tax evaders are even judged quite positively and as more intelligent than the typical tax payer. The most recent study suggests that tax evasion might not be evaluated as positive anymore as in earlier studies, but instead tax avoidance seems to be morally accepted and taxpayers engaging in tax avoidance are judged more positive than the typical taxpayer.
Christoph Kogler, Erich Kirchler

Chapter 9. Ethical Standards for Tax Planning by Corporations

This chapter focuses on corporate tax planning in the context of business ethics and corporate social responsibility (CSR). Should corporations integrate tax planning into their CSR policy? If so, how? Tax planning in the context of CSR is conceptualized in this chapter as good tax governance. Good tax governance goes further than pure compliance with the (letter of the) law because taxation has a moral dimension. Derived from that, good tax governance is presented as a counterpart for aggressive tax planning or tax avoidance. The increased public attention to corporate tax planning practices and the moral dimension of taxation are indicative of the need for corporations to engage in good tax governance if they claim to behave socially responsible. Ethical decision-making in the context of tax planning requires corporations to develop a tax code of conduct and adhere to standards of transparency. This chapter aims to show why and how tax planning can be integrated into CSR.
Ave-Geidi Jallai

Chapter 10. Ethical Standards for Tax Advisers

In this chapter the author reviews the renewed emphasis on tax adviser ethics that is evident in the early 21st Century. The chapter identifies some of the reasons for this emphasis and some of the administrative responses to the involvement of advisers in less acceptable forms of tax planning. The chapter notes signs of a divergence (without concluding that there has been complete separation) of ethics between tax advisers in the legal profession and others. In the course of doing so the chapter identifies the key responsibilities borne by tax advisers to their clients and to society.
Michael Walpole

Tax Law Enforcement


Chapter 11. Taxpayer Rights and Protections in a Digital Global Environment

This chapter explores the impact on taxpayer rights of digital developments in electronics and systems, artificial intelligence, and security. Using an integrated rights framework comprising principles of tax administration and compliance, together with legal rights, it sets out the challenges and opportunities offered by digital disruption. It addresses issues such as proportionality, discrimination, equity and fairness, transparency and bias in legal and administrative decision-making, security, privacy and confidentiality. The chapter takes a global and comparative perspective in addressing significant legal issues that require detailed research and debate. It emphasises the opportunities for government service obligations to taxpayers, using artificial intelligence and secure systems, to provide advanced assistance to taxpayers and businesses and boost economic growth and trade. The chapter concludes that the opportunities are available to enable global implementation of an integrated rights framework to protect taxpayers even more effectively through digital disruption.
Duncan Bentley

Chapter 12. Is There Any International Fundamental Right Against an International General Anti-avoidance Rule?

This chapter discusses the role and main aspects of International Human Rights in the light of justifications for general anti-avoidance rules in international taxation. It analyses whether or not an international GAAR, such as the PPT (principal purpose test) of the OECD Multilateral Instrument may be against some international fundamental rights under International Conventions on Human Rights. It also argues what type of GAAR or specific rules would fit more properly as a legal tool to counteract tax avoidance and analyses its consequences in relation to taxpayers’ rights.
João Dácio Rolim

Chapter 13. Countermeasures to Tax Fraud, Evasion and Avoidance: A Critical Review

After an overview of size and methods of tax evasion and avoidance, I provide an ethical evaluation of a number of controversial enforcement methods used to coerce compliance with tax laws: creating third-party liability for lost VAT; the abuse of law doctrine as developed by the Court of Justice of the European Union; blacklisting of tax havens; public shaming of tax avoiders; and imposing mandatory, third-party, cross-border reporting. The results of the evaluation are mixed but, generally, not positive. Third-party liability is reasonably applied in the EU when it comes to persons acting in good faith but the standards applied to those acting with some degree of mala fides are less satisfactory. Blacklisting is an ethically unacceptable effort to pressure low-tax countries, while violating their sovereignty, towards revising their policies and adhering to a higher rate of taxation and tax policy standards developed without their input or consent. Public shaming is an inefficient and misleading effort to coerce multinational companies to terminate tax planning strategies. FATCA has triggered a development into global information exchange which raises questions as to the protection of civil liberties. Although, the subject measures are not judged positively, this does not diminish the indispensable role of tax law enforcement as a constituent component of the equilibrium model. Policymakers are advised to ensure that tax law enforcement measures meet the equilibrium test, i.e., the required proportionality, because that would not only enhance voluntary compliance but encourage taxpayers to include ethical considerations when deciding on tax planning; and it may lead to a synergetic relationship between taxpayers and tax agencies.
Robert F. van Brederode

Chapter 14. Tax Rulings, State Aid and the Rule of Law

In 2013, the European Commission started investigating the compatibility of tax rulings granted to multinational companies by their domestic tax administrations with EU State aid law. So far, the Commission has found State aid to be present in nearly each case it has been investigating. The investigations have resulted in a situation where the principle of equal treatment and non-discrimination (pursued by the State aid rules) and the principle of legal certainty (which underlies the instrument of a tax ruling) come into conflict. This chapter evaluates the European Commission’s State aid investigations from the perspective of the Rule of Law, which embodies the core values of equality and legal certainty. The chapter concludes that a system of fair taxation, which the European Commission seeks to establish, cannot be achieved if the fundamental elements of the Rule of Law, such as legal certainty and predictability, are at risk. State aid rules should not be used to remedy shortcomings in the tax legislation or administration of the Member States and to scrutinize binding decisions of national tax authorities.
Aleksandra Bal

Chapter 15. Cross-Border Big Data Flows and Taxpayer Privacy

In the last ten years, governments have initiated several reforms to automatically exchange bulk taxpayer information with other governments (mainly via the Foreign Account Tax Compliance Act, the Common Reporting Standard and Country-by-Country Reporting). This enhanced sharing of tax information has been encouraged by technology change, including digitization, big data, and data analytics, and political trends, including government efforts to reduce offshore tax evasion and aggressive international tax avoidance. In some cases, however, legal protections for taxpayer privacy and other interests are insufficiently robust for this emerging international framework to share big tax data. Conceptually, taxpayers should be seen as ‘data subjects’ with rights proactively protected by data protection laws and policies, including fair information practices. An optimal regime balancing the interests between taxpayers and tax authorities should include a multilateral taxpayer bill of rights, a cross-border withholding tax in lieu of information exchange, and a global financial registry to allow governments to identify the beneficial owners of business and legal entities.
Arthur J. Cockfield

Chapter 16. The Ethical Tax Judge

This chapter advances the claim that judges have an ethical obligation of competence that requires them to enhance their knowledge about language (in the context of statutory interpretation) and income tax law design and policy. It articulates some of the foundational understandings that support that competence and provides a simple hierarchy of approaches to interpreting income tax law. It concludes by contending that greater competence is not only more ethical but also advances other important societal goals fulfilled by the imposition of income tax systems.
Kim Brooks
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