'Paying the Tax'

June 21, 2012, by Jonathan

Morality and the Law: A taxing problem

The recent hubbub about celebrity tax avoidance  provides a neat demonstration of some of the connections between morality and the law. An initial response from many who employ strategies of ‘aggressive tax avoidance’ (to be sharply distinguished from the illegal practice of tax evasion) is to argue that since their actions are permitted by the (current) laws, there is nothing to worry about– the problem is with the law, not the tax dodgers. This suggests the view if an action is permitted by law, then it is not morally wrong. More generally, the view is that morality is defined by the law.

But this view has serious problems. There are counter-examples. Some actions are legal but still wrong. Wearing nothing but a Union Jack pair of underpants to the funeral of the sombre politician is not illegal, but rude to the point of being wrong. Other actions have, at certain times, been illegal but not wrong. The Nuremberg Laws of Nazi Germany made sexual intercourse between Jews and Germans (as defined by those laws) illegal, but these acts were not wrong because the laws were manifestly unjust. More broadly, the view that the law comes before morality is simply not consistent with the way in which politicians often justify making laws –by giving explicit moral justification for making an action illegal in the first place.

More interestingly, perhaps, the case of tax avoidance highlights the fact that making laws and making moral judgements are two practices often directed at the same aim – viz. changing people’s behaviour – but with distinct advantages and disadvantages. One way to stop people performing actions that are wrong but not illegal is to change the law and then enforce it. But drafting and enforcing laws can take time and resources and can be difficult to get right (as successive failed attempts to close tax loop-holes demonstrates). The level of compliance laws bring is also in one way highly contingent – as soon as some people feel a law isn’t being enforced, or judge that the risks of breaking it do not outweigh the benefits, they will flout it. On the other hand, the advantages of changing behaviour via the law include its openness (the same law applies to all and the punishments for violation are clear) and the potential strength of its sanctions (few relish time in prison).

Another way to stop people performing actions that are wrong but not illegal is to voice one’s moral disapproval, hoping that they will respond to this public show of disapprobation, and, through an internal sense of guilt or shame, stop performing the condemned act. The advantages of (attempting to) alter others’ behaviour through this method are that it is quick, it doesn’t get the state involved and potentially the level of compliance is much less contingent – for if the wrong-doer’s aroused sense of guilt or shame is sufficiently robust, she will refrain from performing the action even when no police are looking. The disadvantages of moralising are that an individual judgement lacks the communal authority of a law and moralising as a whole can become excessively invasive of personal space and preference – as when certain sections of society seek to morally condemn purely self-affecting sexual practices. Certain individuals, too, are much more responsive to the threat of punishment than the pangs of conscience or communal disapproval.

In many cases, of course, the two methods of altering behaviour form a tag-team: first the action is morally condemned, and if there is sufficient public will the law is subsequently changed. This, in fact, is what seems to have happened in the case of tax avoidance, with the Prime Minister first condemning the action as “morally wrong” (why do journalists always put this phrase in scare quotes?) and subsequently promising law changes. But it is also noteworthy that in this case, the moral method seems to have had effects long before the law can be changed, suggesting that moralising still has a distinct role to play in the modern legal-centric world.


Neil Sinclair

Posted in EthicsPolitical Philosophy