Less certain than death: corporation tax in the modern world

Originally published in Business Fights Poverty:

http://community.businessfightspoverty.org/profiles/blogs/dr-aidan-mcquade-less-certain-than-death-corporation-tax-in-the-m

In the wake of the recent controversies that have been sparked since the announcement of Google’s US $ 130 million settlement with Her Majesty’s Revenue and Customs, it is worth contemplating, of all things, a few interrelated issues of political and moral philosophy; I find they can often help cut through the bluster.

Milton Friedman once declared that the only moral responsibility of business executives was to maximise profits for shareholders within the law.

Friedman was many things, including a brilliant and accessible writer, although many, myself included, would argue, a deeply simplistic one. Even Ronald Reagan was able to grasp the central tenets of his political economics.

We still live in a world crafted by the economic beliefs of Reagan and, in particular, of Margaret Thatcher, which drew deeply on many of Friedman’s core ideas. One consequence was that his view of the ethical responsibilities of business executives has become the dominant moral code amongst business executives across the world.

A further consequence is that many corporate executives see it as a moral responsibility to minimise the tax that their company pays. It is important to understand this as politicians fulminate ineffectually about the “unethical” nature of legal company tax avoidance: that there is a counter-narrative amongst many business people, which asserts that they are doing the right thing, the moral thing, for their shareholders by minimising, or even avoiding, tax.

scrooge mcducI don’t agree with this perspective but my opinion will make little difference when weighed against the vast piles of loot that wholly legal tax avoidance could deliver. In any event that shouldn’t matter. The potential for tension and conflicts between competing moral philosophies was something which Adam Smith already anticipated in The Wealth of Nations (1776) when he argued that it was the state’s responsibility to regulate businesses: how companies can be made to make fair tax contributions is among the most pressing issues of business regulation today.

Certainly this is now a far more complicated issue than it was in Smith’s day as trade is significantly more international. But it is a challenge that must be confronted through extraterritorial law and, perhaps, new tax collection mechanisms, such as those mooted by Nigel Lawson, and the long overdue Robin Hood tax.  New approaches are vital if there is to be any significant progress towards tax justice, greater economic fairness amongst small, medium and large businesses and a balancing of public finances.

This is an issue where the European Union could demonstrate its worth by offering the prize of continued access to EU markets across the entire member states only to those corporations that agree to abide by more transparent and just rules of taxation.

Paradoxically, to get to a position where politicians would be prepared to move on such a project will probably require quite a few more businesses, particularly those who are arguably disadvantaged by not being able to take such a flexible view of where they should be taxed as their giant competitors, demanding such action. Today, very few politicians are prepared to contemplate any significant changes to the globalising political economy without the imprimatur of at least some parts of the business community.

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The Dark Side of the Force: Human agency and human belief

 Much of the Star Wars universe is brilliantly executed fantasy. Some of it – think ewoks and bleeding Jar Jar fecking Binks – is execrable. But in the midst of all of this there is at least one important philosophical point: Obi Wan and Vader follow the same religion. The only difference is that Vader’s path is on the “Dark Side”.

Many belief systems have similar “Dark” and “Light” sides. An atheist, for example, can follow the “Light Side” by viewing life as something she had better do right because she will only get one shot at this. Or she can decide that she can do what she likes, given that there are no immortal consequences for even the worst of actions.

Similarly a Christian could follow the “Light” by seeing each of us a human beings in the image of God in spite of our flaws and differences. Or he could take to judging how poorly everyone else appears against his subjective standards and inflicting his notion of righteous vengeance at every opportunity.

Martha Nussbaum, in The Fragility of Goodness, argues that humans often do evil not because they transgress a moral system, but because they privilege one moral system, or perhaps a particular interpretation of a moral system, over another. Christopher Browning demonstrates the depth of depravity that can emerge from such thinking when one group of “Ordinary Men” in Eastern Poland during the Second World War decided to uphold their perceived duties to their Furher over their more fundamental human duties not to butcher unarmed children, women and men in cold blood.

But, in spite of the power of well demonstrated social pressures in such circumstances, human agency, the choices we make based on our beliefs and values, is still at the core of human action. A person can still choose to be a decent person in spite of the social pressures to the contrary. Or, indeed in spite of their underlying belief system: two of the great “rescuers” of the Second World War, Oskar Schindler and John Rabe, were both card-carrying Nazis. So decency, even heroism, does not depend simply on the belief system that we choose. It also depends on how we choose to interpret it.

I have known great and humane atheists. I have known great and humane Christians, Hindus, Muslims, Jews and Buddists. I have also known one person who used their noisy public commitment to vital human rights issues as a cloak to disguise the immense depth of their moral cowardice and venality. And then there are the murderous Crusaders of history, the Nazis, the Maoists and Stalinists, the Klan and their ideological cousins in Islamic State – those who use their beliefs as excuses to choose the darkest and bloodiest paths through life.

the light side

The “Light Side”

Richard Dawkins and his fellow travellers like to blame religion for so many of the world’s ills. But the sprawling silliness of Star Wars, and the mythical universe that it has created, has hit upon a much wiser understanding of human nature. As Shakespeare, the great chronicler of human folly and human evil, also understood: the faults are in ourselves.