The ethics of paying taxes
Donald Trump has once again modeled for us unethical behavior.
Parents everywhere know the challenge. Whether it’s making sure your children eat their vegetables or go to bed at a reasonable hour or do their homework thoroughly, we find ourselves in the position of making our children do something they don’t like that is ultimately good for them.
The same can be said of paying taxes. Nobody likes paying them — me no more than anyone else. But taxes are essentially the price we pay for a civilized society.
Consider this. As a society, we have decided all of us benefit from having an educated populace. We all benefit from having roads and a fire department at our beck and call. The police, courts and prisons are necessary to maintain order, without which nobody can enjoy the fruits of our civilization. We have decided that our senior citizens deserve not to live in poverty and squalor. We believe that our children should not go hungry or be without healthcare.
Add up the above programs with our military and you have ninety percent or more of what our government pays for. The programs anti-tax advocates point to such as foreign aid, the space program, basic scientific research, or arts support, to name a few, make up an infinitesimal portion of our public spending. And when each of these programs is looked at thoroughly, there is often a very strong case to be made for them. Nevertheless, only pennies out of your tax dollars go to those programs.
We lionize businesses that succeed in lowering their tax liability. These businesses benefit from having an educated workforce, a secure society, and comprehensive infrastructure. But yet, they do everything they can do to reduce their contribution to these costs and often, they brag to Wall Street about their success in doing so.
At the same time, we celebrate business leaders who behave ethically. A key indicator of ethical business practices is the level of community activity the firm engages in, as scholars call it, the firm’s corporate social performance or CSP.
The problem is that the firms and their executives get a lot out of Corporate social responsibility (CSR) activities. For example, research has generally found a link between CSP and firm performance. The reason for this link, whether it be that the public responds favorably to CSP or employees feel more motivated working for such firms, is unclear. But in general, it is accepted that CSR investments return dividends to the firms.
Similarly, firms often engage in CSR to reduce the potential for government regulation. The idea is that the firms can claim there is no need for government intervention because they behave responsibly without such coercion. While there are many problems with regulation, for someone to trust business-people over regulators to look out for their health and safety requires a level of faith I do not have.
Furthermore, research has shown that the more narcissistic a CEO, the more likely he pushes the firm to invest in CSR. In short, these executives love the attention and approbation that comes with CSR.
Indeed, part of the appeal of CSR activities is that you get to choose who is the beneficiary of your largess. In doing so, we have allowed private individuals to decide what are our social priorities rather than allowing society as a whole to make those decisions through the democratic process. And with such donations come the recognition.
Taxes, on the other hand, are anonymous. The distribution of those proceeds are made by society as a whole. The democratic process may be flawed, but at least it allows people an opportunity to provide input as to their priorities. Such opportunities do not exist if we delegate these decisions to the very rich.
That radical Jesus Christ said “when you do your giving, do not let your left hand know what your right hand is doing.” (Matthew 6:3) He called those who announced their charity publicly hypocrites, and praised those who keep their generosity secret. Jesus would be appalled by the selfish and self-serving behavior of Donald Trump and his father in touting their accomplishments while avoiding taxes. Instead, those he would praise people like Mat Ishbia of United Shore mortgage company who turned down tax incentives because the children needed the money more. That is real generosity, and it is the essence of ethical business.
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