Volume 29, 2018
Proceedings of the Twenty-Ninth Annual Meeting
Duane Windsor
Pages 110-123
Responsible Capitalism
Legal Tax Liability Minimization versus Socially Responsible Tax
This paper examines appropriate definition of responsible capitalism in relationship to business tax avoidance and tax policy lobbying (as distinct from illegal tax evasion). Extant literature on this topic tends to assert or assume that tax avoidance and tax policy lobbying are irresponsible, especially with respect to developing countries. The argument is that developing countries have a legitimate need for tax revenues in the public interest. This paper discusses objections to the assertion and the argument. The author separates legal and moral notions about taxation. Generally, in reasonably clean constitutional democracies, businesses and households do not have a moral duty to overpay taxes or to avoid engaging in tax policy lobbying. The decision problem is strategic (for taxpayers) and political (for elected representatives), not ethical. In corrupt regimes, businesses and households arguably face a condition of justifiable civil disobedience.