Why Pay Taxes or be Honest

This kind of stuff makes me mad. I was taught about robber barons in school (or actually I think by my uncle but…). And what I was taught was that business used to be seen as an amoral area. But then society agreed (or rather it no longer was an accepted excuse to claim business was an amoral area) that morality applied to whatever you did, whether you were at work, or not.

But we keep getting these continuing examples that are so distressing: Enron, Worldom, Tyco, Accenture, HP [the broken link was removed]… It is so disappointing that such behavior is mainly excused (until finally the evidence presented is so damning that most stop defending the specific case in question).

Yet so much of what is unethical is barely questioned. If we don’t question things that are this bad, then those who insist on being as devious as they can without being called on it will just practice worse and worse behavior. We have to do a much better job of not tolerating such unethical behavior.

How Merck saved $1.5B paying itself for drug patents

In effect, Merck was paying itself — its subsidiaries still owned a majority of MSD — for the right to use drugs its own scientists had developed. The royalties it paid then largely went straight back into its own coffers, as much of the money was lent to Merck through another subsidiary, according to the people familiar with the transaction. A subsidiary of MSD collected the interest, most of which effectively was returned to Merck when the partnership was liquidated.

The convoluted arrangement gave Merck a sizable tax reduction for roughly a decade. On MSD’s internal books — and only there — a portion of the incoming royalty payments were allocated as taxable income to Abbey. That reduced Merck’s tax liability.

GAO concludes Accenture, others, use tax havens [the broken link was removed]:

The General Accounting Office has concluded that four of the 100 largest federal contractors are incorporated offshore in tax haven countries as a way of lowering their corporate taxes.

One of the four, Accenture Ltd. of Hamilton, Bermuda, is ranked No. 24 on Washington Technology’s 2002 list of Top 100 federal IT prime contractors. The company had $279 million in federal contracts in fiscal 2001, according to the GAO report. Overall, the four companies pulled in $2.7 billion in government contracts during 2001.

Accenture Tax Dodging The Bullet

Tax Loopholes Follow Letter, Not Intent, Of Laws

Why do we not condemn the behavior of those that do these things? I think it is much easier to do the right thing when you get a huge paycheck but we seem to act as though the lawyers and executives that take these actions don’t have the ability to do the right thing. They are just doing what everyone else is doing. I don’t think acting illegally, immorally, unethically is excusable just because lots of other people are. It’s reminds me of little kids that don’t realise that just because their friend did something wrong doesn’t mean they get a pass to do so also. For little kids that seems to be a common phase but why do we accept such behavior in professionals?

I know this type of behavior is always going to exist to some extent. What frustrates me is how bad and common the behavior is. It is not that people are pushing against what is acceptable (that is what will happen). It is sad how bad the behavior is that is considered acceptable.

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2 Responses to Why Pay Taxes or be Honest

  1. ericch says:

    You hit the nail on the head when you said your uncle (or school) taught you that “But then society agreed … that morality applied to whatever you did, whether you were at work, or not.” The results we are seeing today are coming from what, 20 years of ‘business ethics’ being taught.

    Morality demands more than “letter of the law” mentality, whereas you can be ethical by following the letter of the law. Outside of academic institutions that are supported by religious organizations, I would be surprised if morality is taught anymore.

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