Chapters 5 & 6

This weeks reading was based on corporations not following the ‘spirit of the law’ when it comes to taxes. Just a couple quick points I thought I would share.
First of all, I agree with the overall problem of corporations “cheating” when it comes to taxes. I would accept this practice if they were public about it and brought to the attention of Congress how our tax laws are flawed. Also, If we expect companies to adhere to the ‘spirit of the law’ then we must also adhere to it, or at most, make our politicians do it. Especially the ones making the laws. An example is Ted Kennedy and the Kennedy family.

Ted Kennedy is one of the strongest promoters of the estate tax law. He says, “The estate tax is the most progressive of all federal taxes” and “It would be terribly unfair to tax work while giving inherited wealth a free ride” -- June 8, 2006. The Kennedy family has long been part of American politics yet they “avoid the heavy burden of estate taxes by creating numerous trust funds” – New York Times. The facts are through a web of trust funds, the Kennedy family paid only $135K of estate taxes on a $300 million estate which is only 0.04 of the nearly 50% average estate tax rate. So how could we expect corporations to lead by example when our lawmakers don’t?

Another point of the book is how companies should pay their fair share of taxes. But what is this fair share? The Government has certain fiscal policies and responsibilities for which they need to tax people to cover the budget – granted. What if the government is corrupt and has no sense of duty in regards to NOT spending? Why should we pay for this irresponsible spending? This year, July 23 (according to the Adam Smith Institute) is ‘Tax Freedom Day’ for the US. This is the day at which point all Americans and corporations on average have earned enough money to pay their share of taxes. That means for the first 204 days of work this year, all the income has gone to the government. I think corporations and we have a duty to bring to the attention of our government the unfair tax laws. The only way to do it is by circumventing the existing laws so the government sees that the public does not accept the current ones. A bill was introduced in Congress back in 2003 called the “Fair Tax Bill”. It’s been 5 years and it hasn’t even been voted on yet. This is a democracy but if nobody listens to the people, how can we change the unfair laws?