Ethics and Taxes
One of Benjamin Franklin’s most famous observations was, “In this world nothing can be said to be certain, except death and taxes.” While we know that death is certain in daily life, we cannot know exactly when it will occur. We also cannot know in advance exactly how much we owe in taxes, but we have a particular date every year when we must file the paperwork and pay or receive a refund from the government.
No one I know rejoices over paying taxes. This ethics column may not be popular because I want to discuss the moral and ethical responsibility for paying taxes. And we do need to think about this topic, since the April 15 filing date is right around the corner. Of course, we are obligated to pay tax on documented net income after deductions of various kinds. Tax-paying is an obligation of being a citizen of the United States (and in many other countries as well).
There are various types of taxes: personal and business income, passive and active partnership income, property and capital gains, to name a few. Many people do the paperwork and go ahead and file, but are very grumpy about it. Some people I know have tried every way possible to avoid paying what they owe or made every effort to take every exemption (and then some) on a return. There are others—just a few—who think that no one should have a moral obligation to pay taxes, and they choose not to file and lodge a protest with the Internal Revenue Service. So what exactly is the ethical point about paying taxes and about the ethics of the entire tax system? There are three approaches we can take to consider the moral necessity of taxes.
First, it is an ethical necessity to pay for the services we require as citizens. But what do we require? Independent citizens, such as those who belong to the Libertarian Party, claim that we have one necessity of a moral nature from government: the defense of its citizens. Otherwise, each of us is free to form the kind of life we want and to find ways to support ourselves as individuals or through common-interest groups. To such citizens, it is immoral and unethical to tax people for goods and services they do not want to receive.
Secondly, conservative citizens believe that it is ethically necessary to provide essential and basic services to citizens and no more than that. These expenses are shared among all citizens. These services would include fire and police protection, access to public education, capital improvements in a community that increase property values (without increasing taxation) and support of government services at a minimal level. For example, we need to care for our injured veterans and pool our funds to provide for basic necessities such as school buildings and municipal facilities.
A third group has a broader perspective about the role of government. We pay taxes to support quality of life for ourselves and for others. So we pay taxes for parks, libraries, public colleges and universities, public hospitals, capital projects such as airports and seaports and for meeting the needs of those in poverty or struggling with health problems. More liberal people may add that we need to equalize income as much as possible so that those who have much can share what they have, and those who have little can have a better opportunity in life.
Companies and businesses struggle, too, with the tax question. They need to develop as much income as possible to encourage people to invest in the business, and to pay managers and workers at a level the executives determine to be fair. But there can be negative aspects to business operations too. One example: in the manufacturing process, industrial facilities contribute to global pollution and potentially to the global warming process. That has an impact on all citizens. So governments want to assess taxes and penalties on industries to help deal with the impact of pollution so that all citizens can be assured of health and safety.
So the tax question ultimately focuses on one ethical concept: our responsibility as citizens to serve one another and for businesses and companies to assume a clear role as corporate citizens dealing with the effects of their decisions on a wide scale. So we may not like paying taxes—but it is, in the end, the ethical thing to do. IBI
No one I know rejoices over paying taxes. This ethics column may not be popular because I want to discuss the moral and ethical responsibility for paying taxes. And we do need to think about this topic, since the April 15 filing date is right around the corner. Of course, we are obligated to pay tax on documented net income after deductions of various kinds. Tax-paying is an obligation of being a citizen of the United States (and in many other countries as well).
There are various types of taxes: personal and business income, passive and active partnership income, property and capital gains, to name a few. Many people do the paperwork and go ahead and file, but are very grumpy about it. Some people I know have tried every way possible to avoid paying what they owe or made every effort to take every exemption (and then some) on a return. There are others—just a few—who think that no one should have a moral obligation to pay taxes, and they choose not to file and lodge a protest with the Internal Revenue Service. So what exactly is the ethical point about paying taxes and about the ethics of the entire tax system? There are three approaches we can take to consider the moral necessity of taxes.
First, it is an ethical necessity to pay for the services we require as citizens. But what do we require? Independent citizens, such as those who belong to the Libertarian Party, claim that we have one necessity of a moral nature from government: the defense of its citizens. Otherwise, each of us is free to form the kind of life we want and to find ways to support ourselves as individuals or through common-interest groups. To such citizens, it is immoral and unethical to tax people for goods and services they do not want to receive.
Secondly, conservative citizens believe that it is ethically necessary to provide essential and basic services to citizens and no more than that. These expenses are shared among all citizens. These services would include fire and police protection, access to public education, capital improvements in a community that increase property values (without increasing taxation) and support of government services at a minimal level. For example, we need to care for our injured veterans and pool our funds to provide for basic necessities such as school buildings and municipal facilities.
A third group has a broader perspective about the role of government. We pay taxes to support quality of life for ourselves and for others. So we pay taxes for parks, libraries, public colleges and universities, public hospitals, capital projects such as airports and seaports and for meeting the needs of those in poverty or struggling with health problems. More liberal people may add that we need to equalize income as much as possible so that those who have much can share what they have, and those who have little can have a better opportunity in life.
Companies and businesses struggle, too, with the tax question. They need to develop as much income as possible to encourage people to invest in the business, and to pay managers and workers at a level the executives determine to be fair. But there can be negative aspects to business operations too. One example: in the manufacturing process, industrial facilities contribute to global pollution and potentially to the global warming process. That has an impact on all citizens. So governments want to assess taxes and penalties on industries to help deal with the impact of pollution so that all citizens can be assured of health and safety.
So the tax question ultimately focuses on one ethical concept: our responsibility as citizens to serve one another and for businesses and companies to assume a clear role as corporate citizens dealing with the effects of their decisions on a wide scale. So we may not like paying taxes—but it is, in the end, the ethical thing to do. IBI