Ethics in Tax Laws Chapter- 02
Tax avoidance is the legal use of tax laws to reduce one's tax burden. Both tax evasion
and avoidance can be viewed as forms of tax noncompliance, as they describe a range of
activities that intend to subvert a state's tax system, although such classification of tax
avoidance is not indisputable, given that avoidance is lawful, within self-creating systems. Tax Planning is the exploitation/use by the taxpayer of legally permissible methods, tax
credits, tax rebates and tax reductions in order to avoid or reduce tax liability. This is also
known as “tax minimization.”A utilitarian, concerned with aggregate welfare, might be quite relaxed about tax planning. After
all, when tax is avoided, wealth is not destroyed: it is merely kept in the private sector instead of
being transferred to the public sector. The main utilitarian concern would probably be that it
would result in an unintended distribution of the tax burden, as some of the burden would be
shifted from the rich onto people on modest incomes who cannot afford clever tax lawyers. That
would reduce their satisfaction more than it would increase the satisfaction of the better-off
people who have reduced their tax burdens. But that loss to the poor might not happen.A virtue ethicist would unlike tax planning. It is, after all, hardly virtuous to exploit rules knowing
that one is exploiting them in unintended ways to redistribute the disadvantage away from
oneself. A deontologist would not positively favor tax planning, but might not condemn it either.
Deontologists can easily argue for a duty to obey the law: yet obeying the law is something the
tax planner takes care to do, in his own special way.