Morality can be complicated. But when companies move ir profits into tax havens, thing is clear: you don't do that! This was demonstrated not least by indignant reactions of public to announcement of Paradise papers in November.

Aggressive tax avoidance is immoral in eyes of most people. Are you right? Some economists disagree. They say that corporations who legally benefit from paradise tax rates do nothing reprehensible. The general outrage hit wrong ones. It is not companies but states that should be held responsible for aggressive tax design. Wolfgang Kubicki, as FDP vice-President of economic expertise, has recently expressed this conviction when he let him know that tax loopholes would be created by legislator and that legal loyal taxpayers should refore not be discredited. Kubickis view is also found in parts of current tax economic debate and essentially corresponds to official position of OECD.

What's to keep from it?

An answer can be found at American Milton Friedman. As early as 1962, future Nobel Prize laureate argues that corporate social responsibility is limited to maximising profits. But Friedman is neir anarchist nor Amoralist. Profit maximization should take place within morally correct legal framework. Therefore, he suggests something that could be described as a "principle of moral division of labour": companies should be able to maximise ir profits by legal means, and States should responsibly decide what is legal. If today's economists Steuervermeider with hint that for aggressive tax design states alone are responsible, y rely on Friedman's idea.

But what many overlook: principle of moral division of labor is itself a moral principle. It is not natural, but it requires a convincing justification. Now most economists are ethical "Konsequenzialisten". They evaluate actions and rules based on ir consequences. In order to establish convincingly principle of moral division of labour, y would refore have to demonstrate that its application has a positive overall effect.

This article dates back to time No. 53/2017. Here you can read entire output.

In order to achieve this evidence, two conditions must be met: state must first formulate laws impartially, in sense of common good; Secondly, companies must follow se laws as intended by legislator. If both are case, it can be assumed that companies that are chasing money in legal framework at same time serve common good. Profit maximizing companies are n exempted from moral criticism.

However, if conditions are not respected, laws are eir not in sense of all, or y do not reach effect intended by legislator. This n disables justification for moral division of labor – and thus protection against moral criticism.

Ironically, just aggressive tax avoidance shows: At present, none of above conditions are met. In order for legislator to set rules in sense of all, it must be assumed that it cannot be inadequately influenced by selfish corporate interests. However, as numerous studies and journalistic research prove, large companies are taking a successful influence on tax legislation.

Can laws be followed consistently within meaning of legislator? But yes! Only this requires that y eir have no loopholes in regulation or that companies do not exploit existing loopholes. But how? Experts think it is unlikely that re may be laws without loopholes. And fact that companies do not exploit existing loopholes is unlikely, as paradise papers once again prove.

Daniel Witt

is a graduate economist and doctorate philosopher. Currently he works as a Habilitand at Institute of Philosophy of University of Duisburg-Essen. Among or things, he is investigating business ethics.

The two central conditions for validity of principle of moral division of labour are refore not fulfilled. Even those who argue strictly economically should give up. In this case, economists and business economists should no longer defend current operations of multinational corporations such as Apple, Amazon, Nike Co.: As long as y move ir profits into tax havens, y deserve moral penalties of Society. Not only from laymen, but also and especially from economists. Maybe this will help to get you to sanity sometime.

Date Of Update: 26 December 2017, 12:03