Which argument supports the notion of allowing big businesses to lower their tax overheads? A) Enhancing public trust and transparency B) Stimulating economic growth and job creation C) Exacerbating income inequality and social disparities D) Ensuring government revenue for public services
Which argument supports the notion of allowing big businesses to lower their tax overheads? A) Enhancing public trust and transparency B) Stimulating economic growth and job creation C) Exacerbating income inequality and social disparities D) Ensuring government revenue for public services
Chapter12: Tax Administration And Tax Planning
Section: Chapter Questions
Problem 12P
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Transcribed Image Text:Debate Over Allowing Big Businesses to Lower Tax Overheads
The question of whether big businesses should be permitted to lower their tax
overheads is a contentious issue that touches upon economic, social, and ethical
considerations. Advocates argue that businesses have a fiduciary responsibility to
their shareholders to maximize profits legally. Employing tax planning strategies to
minimize tax liabilities allows businesses to retain more earnings, which can be
reinvested into the company for expansion, innovation, and job creation. Additionally,
proponents contend that tax incentives and deductions provided by governments are
designed to encourage investment and economic growth, and businesses have the
right to take advantage of these incentives within the confines of the law.
On the other hand, critics argue that allowing big businesses to lower their tax
overheads through aggressive tax avoidance measures can have detrimental effects
on society. Such practices can exacerbate income inequality by shifting the tax
burden onto individuals and small businesses who may not have the resources to
engage in complex tax planning. Moreover, aggressive tax avoidance by big
corporations can erode public trust in the fairness and integrity of the tax system,
leading to decreased compliance and undermining the government's ability to fund
essential public services and infrastructure.
Furthermore, there are ethical concerns associated with some tax avoidance
techniques employed by big businesses, such as using tax havens and transfer
pricing to shift profits to low-tax jurisdictions. Critics argue that such practices may
be legal but unethical, as they exploit regulatory loopholes and contribute to the
erosion of the tax base, depriving governments of revenue needed to address
societal needs.
Objective Type Question:
Which argument supports the notion of allowing big businesses to lower their tax
overheads?
A) Enhancing public trust and transparency
B) Stimulating economic growth and job creation
C) Exacerbating income inequality and social disparities
D) Ensuring government revenue for public services
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