Tax Avoidance And Tax Taxation Essay

Tax avoidance has become a massive topic of discussion over the past few years, given the current global economic conditions and the cuts to the public sector by the government as a result. This led to increased anger from the public who perceive avoidance by many of the country’s wealthiest people in a time of austerity as greed. Perhaps the most notable demonstration of this anger can be seen in the actions of the group UK Uncut, who for the past year have been organising protests at shops owned by retail tycoon Philip Green who, as the poster boy for tax avoidance, paid a £1.2 billion dividend to his Monaco-resident wife.

In R v. Potisk (1973) The Police charged Potisk with larceny after he was given $2895.17 instead of $1233.23 by a bank teller when exchanging the USD currency and was found not guilty by the supreme court after the judge ruled that it is was not larceny and he was given the money although he was being dishonest. The law is effective in determining justice in this case because he didn't take the money without consent, he was being dishonest and was found not guilty because the judge and evidence proved he committed no econmoic offence. When it comes to white-collar crimes tax evasion is the most common of the three offences (Insider trading, tax evasion and computer crimes). These three offences have different sentences depending on the severeity of the crime but have a minimum of 8 years

This scenario demonstrates the motive to purchase personal expenses and hide small revenues and this ultimately results in a higher expense value, gaining a favourable tax return. Examples within the scenario were buying a sports car, or paying for a trip to Hawaii which are clear violations of the Business Entity Concept. This principles states that a business must be considered a separate entity from the person, and all of its financial matters should be recorded separately from one’s own. This act is seen as an unacceptable behaviour since the business is cheating the government, and keeping the money that could have been used to better the community in addition to violating common accounting standards.

It’s pretty much common knowledge to us all you have to pay taxes! The general rule in the American legal system is that ignorance is no excuse for breaking the law or mistake of law is no defense. I suppose the question here should be, is there an exception to the rule. Is a mistake of the law no matter how stupid a defense to criminal liability?

3. Avoiding paying for costs and expenses while acquiring assets and revenues fraudulently – this takes place in the form of avoiding paying taxes on all of the company’s earning’s and where the company liquidates an employee’s pension account and distributes the proceeds among the board members and upper management in the form of performance bonuses.

However, the companies only have to pay the U.S. tax for foreign revenues once they bring the profits back to the United States. As a result of these current tax laws, U.S. companies that seek to avoid high corporate tax rates hold their foreign earned profits overseas. “It just makes no sense to pay a substantial tax on it,” said Joseph Kennedy, a senior fellow at the Information Technology and Innovation Foundation (Rubin, R.). It is far too easy for an IT corporation to create a patent in a foreign country and direct revenue to a corporation within that country, thus avoiding the much higher U.S. tax rates. According to Joint Committee on Taxation estimates, the lost revenue is increasing over time as corporations find even more creative ways to make their U.S. profits look like offshore income (Richards, K., & Craig, J.). As result, multinational American corporations have as much as $2 trillion held in overseas subsidiaries and if brought into the United States with the current tax laws, the federal government could benefit by nearly $50 billion per year.

To add a new level of complexity to the equation that allow tax lawyers to work their magic for large corporations and hyper wealthy individuals is the countless loopholes to choose from. Individuals have the ability within the tax code to reduce or defer the capital gains tax through many ways. List theses Taxpayers may defer capital gains taxes by simply deferring the sale of the asset. In addition, depending on the specifics of national tax law, taxpayers may be able to defer, reduce, or avoid capital gains taxes using the following strategies. A nation may tax at a lower rate the gains on investments in favored industries or sectors, such as small business. There may be accounts with tax-favored status. The most advantageous let gains accumulate in the account without taxes; taxes are paid only when the taxpayer withdraws funds from the account. Selling an asset at a loss may create a "tax loss" that can be applied to offset gains realized in the future, and avoid or reduce taxes on those gains. Tax losses are a business asset, but the

A sustainable budget with crackdowns on tax avoidance and loopholes, address the issue of tax avoidance that are cause by legal

In order for the reader to fully comprehend what the tax evasion argument is and how alternative possibility are not required for responsibility, it is

9. The Internet company Google managed to avoid $2 billion in international income taxes in 2011 by moving a hefty sum of its revenues to subsidiaries in Bermuda, according to CNBC, which cited a report by Bloomberg.[1] The search giant reportedly stashed $9.8 billion in revenues to its shell company in Bermuda — which doesn't have a corporate income tax — last year allowing the company to shave its overall tax rate by almost 50 percent. Google's Bermuda move was disclosed in a Nov. 21 filing by a subsidiary in the Netherlands. While the company's move to shift funds to the country was legal, it could spur the growing global criticism of corporate tax

However, the introduction of such a law becomes increasingly difficult when the companies being questioned are some of the largest and wealthiest in the world. In order to truly understand the stature of these companies, one would need to look into some of the statistics regarding them. Remarkably, according to Al Jazeera America “the largest 500 U.S. companies would owe an estimated $620 billion in U.S. taxes” if they had to declare all their overseas stockpiles, of around $2.1 trillion (“Al Jazeera America”). In addition, it found that “three-quarters of the 500 biggest companies utilize tax havens”. The top three offenders included Apple, General Electric and Microsoft. In many cases according to the report, the money is not being utilized to improve foreign economies. By this they mean to say that, U.S. businesses were not using their overseas profit to build factories and employ individuals. Instead, the overseas profit was a result of accounting tricks purposely implemented to benefit the business alone. To put all of this in perspective, the United States is losing billions of dollars to foreign economies. These taxes are being introduced into countries such as Ireland and Luxembourg. In other words the money that should be invested in the United States of America on public services, is being

Also many people can find ways around taxes, both legal and illegal, so they don't pay as much as they should be.

As the tax avoidance is considered the grey areas in the law, hence, no one can claim it as absolute unethical. The natural law may express the unpleasant practice of tax avoidance, but the manager may not perceive the natural as part of their ethical reasoning, when there are several sources of universally applicable laws. Once again, neither the absolutism stop tax avoidance, nor encouraging, as it does not clearly stated it stance. Corporations with absolutism are likely to make their own judgement on the

A tax haven is a country that offers foreign corporations and individuals relatively low corporate and income tax rates, with a politically and economically stable environment. Some tax havens are Switzerland, Hong Kong, Bermuda, Ireland, and the Cayman Islands. Although the businesses have moved across seas, the United States forces them to pay the corporate tax. Fortunately for the businesses, it they keep their income and money across seas they do not have to the pay the American corporate tax, Unfortunately this is ghastly for the United States Government businesses keep their products and profits over seas.

The actions of multinational corporations (MNCs), which derive from their morally dubious goals, may be completely legitimate within a capitalist society. One of these actions that will be examined in this essay is the use of tax havens, as a way of avoiding higher tax liability. This paper will utilise the case study of Apple’s tax avoidance, in examining the legitimation of a company’s goal of profit maximisation, a goal that is against the moral/social consensus