Editor's Letter : Robbing Peter to Pay … Peter?

DEAR READER

 

 

It comes as welcome news that US lawmakers are renewing their efforts to crack down on corporate tax evasion (see Milestones, page 12).The Internal Revenue Service, too, is planning on pulling out all the stops in its campaign against tax evasion.Their determination is laudable, but there is only so much that enforcement agencies can do.Their tactics for tracking down and prosecuting tax dodgers may be more sophisticated than ever, but those looking to avoid paying tax still have the upper hand.With their legions of highly paid advisers willing to stretch the law to—and sometimes beyond—its limit, they can generally stay ahead.

 

Part of the problem is that tax is generally viewed as a bad thing. It is widely considered fair game for a company or individual to do whatever they can to minimize their tax burden. But taxes are levied for a reason, and if they are well managed they are certainly not bad.Without them a democratic society would not last long. Tax revenues help build roads and schools, support social programs, protect endangered environments, maintain law and order, and fund national defense.

 

Of course, there is never enough to go around, and increasingly society looks to the not-for-profit sector to step in and plug the gaps.The corporate world plays its part, too: Many corporations are enthusiastic supporters of those charities that fill in the gaps.As the focus on corporate social responsibility intensifies, the resources that companies are prepared to commit to being socially responsible are growing dramatically.

 

So there seems to be some confusion here. Even the most conservative analysts estimate that US corporations are evading around $12 billion each year in states taxes alone.Yet some of those same corporations are spending many millions on their corporate responsibility programs, which often help projects left high and dry by the shortage of tax dollars. Surely paying corporate taxes is a key responsibility, too.

 

 

Dan Keeler

dan@gfmag.com

 

Related Articles