8/9/2019 Chapter 2 Three-card monte

http://slidepdf.com/reader/full/chapter-2-three-card-monte 1/2

Chapter 2: Three-Card Monte

1. Summarize the positions of both critics and supporters of these tax strategies.

For the position of critics, these tax strategies are unethical and may harm the

development of the country. This is due to the corporate tax from the corporation is themain source of revenue which government use for the expenses of social welfare. Thus

the payment of tax is considered as a social responsibility for the corporation.

For the supporters of these tax strategies, they probably think that these are good

strategies in maximizing the corporation profit. This is because the corporation able to

reduce the tax expenses in a legally as it is acting within the law in force at the time. At

the same time, the corporation will also able to maximize the wealth of its shareholders

through the reducing of tax expenses.

2. Supporters and critics of these tax strategies agree that corporations are making

use of legal financial options that are aailable to them under current tax la!.

"o!eer# does that e$uate to ethical business conduct% &h' or !h' not%

This does not equate to ethical business conduct as avoiding tax is avoiding a social

obligation. aying a fair amount of tax in the countries where they operate is seen as the

socially responsible thing for corporations to do as the corporations have obtained

 benefits either directly or indirectly from the public services provided by government.

For example, the public service includes healthcare, education and infrastructure. Thus,

corporations need to contribute to the government by providing fund for public servicesthrough tax payment. !f most of the corporations are practicing tax avoidance, the

government would eventually have to cut on their spending since their revenue has been

decreased. This will have a real impact on everyday lives of people. !n conclusion, the

corporations should not "ustify the tax avoidance as ethical business conduct through the

 belief that the activity is within reasonable ethical and legal limit and the activity is in the

corporation#s best interest.

(. The )rench chairman and C*+ of ,ouis uitton# ernard /rnault# recentl'

announced that he !as leaing )rance for elgium# allegedl' to aoid the ne!

highest-income tax rate of 0 percent. s that an' different from !hat corporations

are doing% &h' or &h' not%

There is no different from what the corporations are doing as it is also a type of tax

avoidance strategy for the individual tax expense. Through this affair, the revenue of the

government will also be reduced and consequently affected the social welfare. $esides

8/9/2019 Chapter 2 Three-card monte

http://slidepdf.com/reader/full/chapter-2-three-card-monte 2/2

that, he is also the one who are en"oying the public infrastructure available. Therefore, he

has the responsibility to payback the social for what he had en"oyed.

The only difference that we can noted between the corporate tax avoidance and individual

tax avoidance will be the total amount involve in these % parties, &orporation logically

will earn much more than an individual in a single financial year. Thus, the tax incurred by the corporation for sure is much larger than individual incurred. 'ubsequently,

government#s revenue reduce more significantly from the corporate tax avoidance

compared to individual tax avoidance.