The Relationship Between Tax Avoidance And Corporate Social Responsibility

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.

It is overwhelming how corporations have embedded a social responsibility in their mission statements and company objectives. This leaves us with one assertion that is that corporations do have some level of obligation towards society’s morality; however, the corporation itself is not a moral agent (Klaus M. Leisinger). The discussion that follows is about corporations being moral agents or otherwise; however I will reach a conclusion that corporations do have an obligation that extends beyond obeying the law; evens so this obligation have been derived from the corporations quest for profit making. Corporation’s obligation

The ethical issues presented in this case are the different views that each individual has on how the idea of corporate social responsibility (CSR). This dispute is between Mr. Milton Friedman, John Mackey, and T.J. Rodgers; all of which has a different outlook on CSR. The definition of CSR refers to the responsibilities that business has to the society in which it operates and to those actions that a business can be held accountable. Most philosophers have come up with three different types of responsibilities that corporations can be held accountable for. The first and most important of the three is a corporation’s duty to not cause harm. If a corporation can

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

Petrenko. A. Corporate social responsibility [Power Point Slides]. Retrieved from Lecture Notes Online Web site: https://moodle.yorku.ca/moodle/course/view.php?id=39261

In an attempt to answer a new question, “Is Corporate Social Responsibility a myth?” this paper also tries to evaluate what Poruthiyil (2013) eloquently states:

This is a persuasive paper defining various business terms like corporate social responsibility and equal distribution of wealth. The thesis statement does state that the CSR programs are applied in various developed organizations to set an example for small and rising enterprises whereas the anti thesis statement is that there are no moral obligations felt by businesses to be involved in CSR. The financial aspect of CSR activities is also discussed; at times it is thought that involvement of business in any environmental friendly work may lead to higher costs whereas an opposite point of view is that CSR increases long run profit (Aras & Crowther, 2009). Now day’s Triple bottom line concept is aligned with business which is another

Milton Friedman was an American economist, statistician and writer, who had a massive impact on the research agenda of the economics profession. His famous words “the only responsibility of business is to increase its profits” (Friedman, Milton. 1970) led to many controversial debates on whether businesses should have ethics or if profit should be their main goal. Corporate social responsibility has many definitions, as its interpretation is quite loose, so I have chosen one that relates the most to this essay, given by the World Business Council for Sustainable Development, in 2000: “Corporate social

Taxes are a major contributor of the American economy. The tax system in the United States depends on voluntary compliance, which means that each citizen is responsible for filing a tax return when required and for determining and paying the correct amount of tax”. (Albrect, Albrect, Albrect & Albrect and Zimbelman). When individuals under report, exaggerate deductions, and hide money in off shore accounts, this is clearly misrepresentation of their income to the Internal Revenue Service (IRS) and is deemed tax evasion. The term “tax evasion” is defined as using illegal

With the development of modern society, multinational companies reach higher profits than before. For instance, Starbucks got 495 million of sales revenue while it only paid 6 million of tax to the government. It turns into the topic of tax avoidance. Actually, there are many multinational companies use the strategy of tax avoidance, and Starbucks is just one of the examples.

There is an ongoing debate on the relationship of tax avoidance with corporate social responsibility (CSR) and ethical behaviour of companies. Specifically, corporate social responsibility can be defined as companies undertake the responsibility for social welfare and development (Matten and Moon, 2008). For ethical behaviour, it is referred to govern the actions of individuals and organizations in the business under contemporary standards (Epstein, 1998). Moreover, this is the difference between tax avoidance, which companies use appropriate methods to reduce the amount of tax within the law, and tax evasion, which can be defined as illegal to reduce taxes (Hasseldine and Morris, 2013). According to US Treasury (2009), each year the US government may lose more than $345 billion revenue because of a variety of tax avoidance. Moreover, the UK government also faces the problem of losing tax, at £40 billion each year (HM Revenue and Customs, 2010). In recent years, an increasing number of governments, media, and non-government organizations claim that corporate tax avoidance is not conducive to the development of society and ethical behaviour of enterprises. The aims of this essay are to research the motivations of corporate tax avoidance, and discusses to a large extent corporate social responsibility and ethical behaviour of firms is in conflict with tax avoidance, even though they have some consistency. The first section of the essay will research the motivations of

The idea that morally dubious goals may be legitimate inside capitalism will be discussed in light of a tax avoidance case study. Apple, a multinational technology company, has avoided paying its fair amount of income tax for years. This paper will consider the structural embeddedness of Apple’s legitimised goal—the maximisation of profit—through the ‘Double Irish Dutch sandwich’ tax haven model. Durkheim’s theory of collective conscience was used in explaining the legitimisation of the company’s profits-driven goal, and how its amorality becomes apparent outside the economical sphere. This paper will also discuss the interconnected nature of the harm and benefits in the deal made between Ireland and Apple. The association between legitimations of Apple’s conduct and its socially challenging behaviour has been analysed to be ambiguous in the letter of the law. The conclusion will shed light on the morally grey area of a company’s responsibility to its shareholders versus the needs of the community.

There is an ongoing debate that the relationship of tax avoidance with corporate social responsibility (CSR) and ethical behaviour of companies. Specifically, corporate social responsibility can be defined as companies undertake the responsibility for social welfare and development (Matten and Moon, 2008). For ethical behaviour, it is referred to govern the actions of individuals and organizations in the business under contemporary standards (Epstein, 1987). Moreover, this is the difference between tax avoidance, which companies use suitable methods to reduce the amount of tax within the law, and tax evasion that illegally reduction of taxes (Hasseldine and Morris, 2013). According to US Treasury (2009), each year the US government may lose more than $345 billion revenue because a variety of tax avoidance. Moreover, the UK government also faces the problem of losing tax, with £40 billion each year (HM Revenue and Customs, 2010). In recent years, an increasing number of governments, media, and non-government organizations claim that corporate tax avoidance is not conducive to the development of society and ethical behaviour of enterprises. This essay will research into the motivations of corporate tax avoidance, and discusses to a large extent corporate social responsibility and ethical behaviour of firms is in conflict with tax avoidance, even though they have some consistency. The first section of the essay will research the motivations of corporate tax avoidance. In the

Crane, A. and Matten, D. (2010) ‘Corporate social responsibility’, (3rd edition) Business Ethics. Oxford: Oxford university press, pp.51-60

Well knows companies are involved in tax avoidance. The company’s that’s has one of the highest incomes in the world. In fact their income is so high that it can be calculated in terms of GDP. For example