The Key Causes For Tax Evasion

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People can be driven to behave recklessly if an outcome is well supported by incentives. The motivational aspect of an outcome is exactly what pushes companies and individuals alike to perform a task that they would normally not do. Motivation is the key cause for tax evasion, since it helps avoid a massive proportion of expenses that would generally be incurred. As illustrated by the case study that was provided by the Australian Financial Review, a small number of people do heavy tax lifting as opposed to the rest of the population. This means that there are a few people that earn a significant amount of money and due to progressive tax rates, the overall amount of tax that this small group of individuals would have to pay would be…show more content…
This concept has shown prominence through every stage of business evolution and has still remained as an essential factor that every business in the modern generation strives to achieve. Profit not only shows a company’s efficient performance, but it also dictates how the company will be accepted within a society. This is supported by Friedman (1962, pp.23), as he mentions that ethical compromises can be made to achieve greater goals. Since the most fundamental goal of every business organisation is to earn profits and succeed amongst their competitors, it can be agreed that companies would be willing to sacrifice a certain amount of ethical decision making. The opportunity cost in this case is preferable for the people that would want to give up a portion of their ethical mindset to earn a larger profit share for their own selfish career oriented desires. (Lincoln, Pressley, & Little, 1982, pp.476).

Taking the aforementioned fact that profit is main goal of a company into consideration, it is crucial to understand that accounting is the crux of every business organisation. The Conceptual Framework clearly states that all information within financial reports should be free of bias and material error, i.e. the information must be
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