Tuesday, April 22, 2008

questions after reading the tax cases...

Indeed, corporations must accept the taxing and regulatory authority of the governments in which it actually conducts business. If they don't, in the short run, corporation might gain profit from saving state tax. But in the long run, state government won't have sufficient resource to continuously develop the place, which will eventually result a bad consequence for these corporations.
However, since this kind of tax incentive system has been in US for a while, and no obvious economic harm related to this system. I wonder if there is also some good consequence balanced the bad effect of it. One possibility is that corporations spent the profit they save on the tax on the expansion investment in the state where they really conduct their businesses. The extra investment could encourage the economic development of the place, and offset the negative impact of tax income loss.
I understand it is a pure assumption. And my underlying question is how the world can improve if the corporation stop doing that? If we don't have the answer, it is very difficult to stop corporation from keeping avoid tax as much as possible!
Other more practical question, did we consider ourselves unethical when we tried to save some money from the tax? Should we have to change ourselves after we realize that we should not only follow the tax law but also its spirit?

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