Whether tax avoidance is an acceptable business practice
Tax avoidance is a very common phenomenon in modern society, as it is a legal way to reduce taxation, in other word, to increase profit. There are two main types of tax avoidance, one is using methods, allowed by law, to minimise tax, another one is manipulating tax loopholes to reduce tax payment. This essay will mainly discuss the later type, as the line between this kind of tax avoidance and tax evasion is not clear, and there are numerous debates about whether tax avoidance is an acceptable business practice.
This article will be divided into three main parts: first of all, it will figure out the accurate definition of tax avoidance; next, it will illustrate the reason why this phenomenon …show more content…
Tax evasion “consists in the wilful violation or circumvention of applicable tax laws in order to minimize tax liability”[ Black 's Law Dictionary 1501 (8th ed. 2004)], which would involves “active or passive deception”[ Mike Lennard, “Avoidance and Moriality” ]. It is obvious that tax evasion is a crime, and be forbidden by the law.
Differing from tax evasion, tax avoidance is a legal action and has not break tax law. As there is no deceit in tax avoidance, and tax-avoiders only employ legal methods to reduce taxation. And the United States Supreme Court once said that "The legal right of an individual to decrease the amount of what would otherwise be his taxes or altogether avoid them, by means which the law permits, cannot be doubted"[5 Gregory v Helvering,[1934], 293 U.S. 465].
But to be honest, tax avoidance belongs to grey area, the line between avoidance and evasion sometimes is not clear, and some legal activities may become illegal activities under some …show more content…
Tax revenue is the basis for a country to run their normal affairs, if the tax payer exploiting tax loopholes to reduce tax payment, the revenue will be insufficient. In order to solve this problem, the governments may increase the tax rates or adopt other measures which will pose a threaten burden on those who have paid the tax, and the cost of investigating tax avoiders may be increased. The tax avoiders’ win is the taxpayers’ loss[ Chris Tailby, “Some reflections on tax avoidance” [2011] P.C.B. 43-47]. It will result in the harsh reality, and the society may got into turbulence.
Similar with the former disadvantage, the different taxation will be harmful to the domestic economy market. It is unfair for some domestic companies or individuals to pay the tax while some multinational corporations just pay a little taxation, which will weaken the competition ability of domestic corporations and undermine the market competitiveness in the
Tax avoidance is a very common phenomenon in modern society, as it is a legal way to reduce taxation, in other word, to increase profit. There are two main types of tax avoidance, one is using methods, allowed by law, to minimise tax, another one is manipulating tax loopholes to reduce tax payment. This essay will mainly discuss the later type, as the line between this kind of tax avoidance and tax evasion is not clear, and there are numerous debates about whether tax avoidance is an acceptable business practice.
This article will be divided into three main parts: first of all, it will figure out the accurate definition of tax avoidance; next, it will illustrate the reason why this phenomenon …show more content…
Tax evasion “consists in the wilful violation or circumvention of applicable tax laws in order to minimize tax liability”[ Black 's Law Dictionary 1501 (8th ed. 2004)], which would involves “active or passive deception”[ Mike Lennard, “Avoidance and Moriality” ]. It is obvious that tax evasion is a crime, and be forbidden by the law.
Differing from tax evasion, tax avoidance is a legal action and has not break tax law. As there is no deceit in tax avoidance, and tax-avoiders only employ legal methods to reduce taxation. And the United States Supreme Court once said that "The legal right of an individual to decrease the amount of what would otherwise be his taxes or altogether avoid them, by means which the law permits, cannot be doubted"[5 Gregory v Helvering,[1934], 293 U.S. 465].
But to be honest, tax avoidance belongs to grey area, the line between avoidance and evasion sometimes is not clear, and some legal activities may become illegal activities under some …show more content…
Tax revenue is the basis for a country to run their normal affairs, if the tax payer exploiting tax loopholes to reduce tax payment, the revenue will be insufficient. In order to solve this problem, the governments may increase the tax rates or adopt other measures which will pose a threaten burden on those who have paid the tax, and the cost of investigating tax avoiders may be increased. The tax avoiders’ win is the taxpayers’ loss[ Chris Tailby, “Some reflections on tax avoidance” [2011] P.C.B. 43-47]. It will result in the harsh reality, and the society may got into turbulence.
Similar with the former disadvantage, the different taxation will be harmful to the domestic economy market. It is unfair for some domestic companies or individuals to pay the tax while some multinational corporations just pay a little taxation, which will weaken the competition ability of domestic corporations and undermine the market competitiveness in the