Christian attitudes toward ethics of tax evasion: a case study
| Pages | 74-94 |
| Published date | 07 January 2019 |
| DOI | https://doi.org/10.1108/JFC-11-2017-0104 |
| Date | 07 January 2019 |
| Author | Robert W. McGee,Serkan Benk |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial crime |
Christian attitudes toward ethics
of tax evasion: a case study
Robert W. McGee
Broadwell College of Business and Economics, Fayetteville State University,
Fayetteville, North Carolina, USA, and
Serkan Benk
Inonu University, Department of Public Finance, Malatya, Turkey
Abstract
Purpose –The purposeof this study is to examine Christian views on the ethics of tax evasion.
Design/methodology/approach –To achieve this objective, data weregathered from the most recent
World Values Survey, whichincluded 60 countries. The sample size exceeded 30,000. Various demographic
variables were also examined,such as gender, age, marital status, education level, income level,social class,
positionon the political spectrum and others.
Findings –This study found that although there was widespread opposition to tax evasion, it could be
justified sometimes. Not all Christiansects had the same view of tax evasion. Some sects were less severe in
their oppositionthan others. This study ranked the varioussects from least to most opposed.
Originality/value –The presentstudy expands the religions literature byshowing that differing Christian
sects have opinions on the ethics of tax evasion that differ significantly, and that it cannot be said
categorically that the more conservative Christian sects are either more opposed or less opposed to tax
evasion thanare the liberal or moderate sects.
Keywords Religion, Ethics, Christianity, Tax evasion
Paper type Research paper
1. Introduction
There is a substantive difference between tax avoidance (Lee,2016, 2017) and tax evasion.
Tax avoidance is legal and merely involves arranging one’s affairs so as to reduce or
minimizethe tax liability. Tax evasion,on the other hand, is illegal (Braithwaite, 2017).
There are several ways to structure a business so as to legally reduce tax liability. One
common method multinationalcorporations use is to avail themselves of tax havens and/or
offshore accounts (Jones and Temouri,2016;Lee,2016, 2017;Richardson and Taylor, 2015).
Whether the use of offshore entities constitutes avoidance or evasion depends on the facts
and circumstances.
The morality of tax avoidance has also been discussed in the literature.At one end of the
spectrum is the argument that the only duty a corporation has is to maximize profits
(Friedman,1962, 1970) or that there is a fiduciary responsibility to the shareholders to
minimize expenses (Avi-Yonah,2008, 2014;McGee,2004, 2012), which necessarily involves
minimizing tax liability. At the other end of the spectrum is the belief that a corporation (or
individual) somehow has a moral dutyto pay more than the legal minimum the law requires
(Campbell and Helleloid, 2016;Dowling, 2014).The “fair share”argument has been used to
support the position that a corporation has a duty to pay a certain percentage of its income
to some government even though using legal strategies to minimize or eliminate the tax
liability are available(Campbell and Helleloid, 2016).
JFC
26,1
74
Journalof Financial Crime
Vol.26 No. 1, 2019
pp. 74-94
© Emerald Publishing Limited
1359-0790
DOI 10.1108/JFC-11-2017-0104
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1359-0790.htm
A number of studies on various aspects of tax evasion have been done in recent years.
Many of them take a public finance perspective (Bustos-Contell et al.,2017;Dronca, 2016)
and examine issues such as optimal taxevasion (Levaggi and Menoncin, 2016), how best to
raise revenue and/or reduce evasion, reasons for evasion and so forth (Alm and Torgler,
2006;Alm, et al., 2010;Braithwaite,2017;Torgler et al.,2008;Torgler, 2010;Trandafir, 2017).
The present study takes a different approach. It examines Christian attitudes toward tax
evasion using the data gathered by the most recent wave of the World Values Surveys,
which included 60 countries.The sample size exceeded 30,000.
2. Literature review
Tax evasion and avoidance have existed ever since the first government attempted to raise
revenue from its subjects (Adams,1982, 1993). From time to time, there have been tax
revolts, when a sufficient number of taxpayers become intolerably frustrated with the
existing system (Baldwin, 1967;Beito, 1989). Indeed, the American Revolution of the 1770s
was partially triggeredby a tax on tea and document stamps.
The public finance literature addresses the issue of tax evasion, but only tangentially
(Bustos-Contell et al.,2017;Dronca, 2016). Public finance authors tend to focus on other
aspect of taxation, such as the pros and cons of various tax policies (Buchanan, 1967;
Buchanan and Flowers, 1975;Musgrave,1959, 1986), although a few authors have focused
on philosophical aspects of taxation (McGee, 1994,2004,2012). Buchanan and Musgrave
examined taxation from the perspective of the proper role of government and arrived at
markedly different conclusions(Buchanan and Musgrave, 2001). Almost no one attempts to
answer the question of how taxationcan be justified (Block,1989,1993).
A few authors suggest that perhaps taxation cannot be justified. Spooner (1870) points
out that the so-calledsocial contract was never actually signed by anyone,and even if such a
contract did exist in the past, it does not bind anyone who did not sign. Thus, there is no
moral obligation to support institutions just because someone happens to be born in a
certain country,state or city. Some further justification is required.
Harvard philosopher Robert Nozick (1974) likens the income tax to slavery. If the
government confiscates40 per cent of a person’s income, then that is the same, in substance,
as forcing someone to work for two days a week. Such people are 40 per cent slaves,
according to Nozick. Although Nozickdoes not advocate tax evasion and does not justify it
in so many words, if one starts with Nozick’s argument, it is not difficult to extrapolate to
arrive at the conclusionthat tax evasion can be justified. If a slave has no moral obligationto
work for a slave master who confiscates 100 per cent of the fruits of the slave’s labor, then
there is no moral obligation to turn over 40 per cent of the fruits of one’s labor if some
government takes the place of the slave owner at collectiontime.
The argument has been made that there is a moral obligation to pay taxes to a
government that provides benefits to the taxpayer (Crowe, 1944;McGee,1994, 2012), but
what if the government provides services that the taxpayer does not want or cannot use,
such as free public education for people who do not have children or prostate exams for
women? How can such exactionsbe justified in such cases? Many people, perhaps a sizeable
majority, believe that there is always, or almost always, a moral obligation to pay taxes,
even if the taxpayer does not benefit, and arguments havebeen made to justify this position
(McGee et al.,2012), but such arguments do not always hold up under close philosophical
analysis (McGee, 1994,2004,2012).Some authors have taken the position that evadingtaxes
is cheating the government(Cowell, 1990), an argument that has the underlying premisethat
governments somehow are morallyentitled to the exactions, which may not always be true.
For example, it would be difficult to justify the argument thatJews living in Nazi Germany
Ethics of tax
evasion
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