Tax Aggressiveness

 Tax Aggressiveness Essay

TaxВ AggressivenessВ

" OverВ andВ overВ againВ courtsВ haveВ saidВ thatВ thereВ isВ nothingВ sinisterВ inВ arrangingВ one'sВ affairsВ soВ asВ toВ keepВ taxesВ asВ lowВ asВ possible. В EverybodyВ doesВ so, В richВ orВ poor, В andВ allВ doВ right, В forВ nobodyВ owesВ anyВ publicВ dutyВ toВ payВ moreВ taxesВ thanВ theВ lawВ demands. В TaxesВ areВ enforcedВ exactions, В notВ voluntaryВ contributions. ” (Hand, В 1947). В ItВ isВ thisВ viewВ­pointВ thatВ spursВ managementВ towardsВ taxВ aggressiveВ behavior. В TaxВ aggressiveВ behaviorВ canВ beВ brokenВ downВ intoВ twoВ mainВ areas: В 1)В ReducingВ aВ company'sВ effectiveВ taxВ rateНѕВ andВ 2)В IncreasingВ theВ amountВ ofВ permanentВ differencesВ betweenВ financialВ reportedВ incomeВ andВ taxableВ incomeВ thatВ isВ reportedВ toВ theВ government. В В

TheВ benefitВ ofВ taxВ aggressiveВ behaviorВ isВ ultimatelyВ toВ reduceВ aВ company'sВ taxВ liability. В ThereВ areВ howeverВ manyВ possibleВ costsВ associatedВ withВ thisВ typeВ ofВ behaviorВ thatВ managementВ mustВ considerВ beforeВ acting. В ByВ engagingВ inВ taxВ aggressivenessВ aВ companyВ exposesВ themselvesВ toВ theВ potentialВ threatВ ofВ penaltiesВ fromВ governingВ taxВ bodiesВ forВ nonВ­complianceВ toВ regulationsВ (eg. В IRS). В TheВ firmВ mayВ alsoВ faceВ bothВ reputationalВ andВ politicalВ costsВ byВ beingВ labeledВ asВ aВ " poorВ corporateВ citizen” (HanlonВ & В SlemrodВ 2009). В TaxВ aggressiveВ behaviorВ isВ typicallyВ viewedВ inВ aВ negativeВ mannerВ byВ theВ public. В ItВ isВ thoughtВ thatВ newsВ ofВ theseВ tacticsВ firstВ makesВ theВ publicВ andВ theirВ suppliersВ questionВ whetherВ theВ firmВ isВ dealingВ aggressivelyВ withВ allВ ofВ theirВ interactions. В ThisВ inВ turnВ couldВ resultВ inВ thoseВ individualsВ becomingВ hesitantВ toВ continueВ dealingВ withВ theВ firmВ (KleinВ & В Leffler, В 1981). В ItВ alsoВ bringsВ intoВ questionВ theВ possibilityВ ofВ undetectedВ taxВ aggressiveВ behavior, В thatВ ifВ broughtВ toВ lightВ couldВ resultВ inВ prosecutionВ andВ otherВ associatedВ costsВ (DesaiВ & В Dharmapala, В 2009). В LastlyВ ifВ aВ firmВ isВ caughtВ engagingВ inВ theseВ tacticsВ thisВ couldВ leadВ toВ aВ perceptionВ ofВ managementВ incompetence, В " assumingВ thatВ smartВ managersВ wouldn'tВ getВ caught”В...

References: Desai, В M. В A., В & В HinesВ Jr., В J. В R. В (2002). В ExpectationsВ andВ Expatriations: В TracingВ theВ CausesВ andВ

ConsequencesВ ofВ CorporateВ Inversions. В NationalВ TaxВ Journal, В 55(3), В 409В­440. В

Hanlon, В M., В & В Slemrod, В J. В (2009). В WhatВ doesВ taxВ aggressivenessВ signal? В EvidenceВ fromВ stockВ

Desai, В M. В A., В & В Dharmapala, В D. В (2006). В CorporateВ taxВ avoidanceВ andВ highВ­poweredВ incentives. В

Desai, В M. В A., В & В Dharmapala, В D. В (2009). В CorporateВ taxВ avoidanceВ andВ firmВ value. В ReviewВ OfВ

EconomicsВ AndВ Statistics, В (3), В 537. В

Bosch, В J., В & В Eckard, В,. В W. В (1991). В TheВ ProfitabilityВ ofВ PriceВ Fixing: В EvidenceВ FromВ StockВ

A. В Jalan, В KaleВ J. В R., В & В MeneghettiВ C. В 2013В CorporateВ TaxВ AggressivenessВ andВ theВ RoleВ ofВ Debt. В

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