The philosophy of taxation and why Apple should pay up

Vittorio Bufacchi argues it is the duty of everyone to pay its share if we want to live in a fair society and multinationals must play by the same rules as all citizens.

THERE are two certainties in life: death and taxes. Unless, that is, you are Apple Inc.

The pivotal role of taxation in the modern polity cannot be overstated, and over the years numerous thinkers have reasoned that the system of taxation is synonymous with the establishment of modern statehood.

According to economist Joseph Schumpeter (1883-1950) the modern capitalist state is first and foremost a tax state; while sociologist Norbert Elias (1897-1990) considered taxation a necessary condition in the slow process of civilisation.

The fact that a multinational technology company with allegedly $200bn cash reserve does not pay taxes in Ireland, and furthermore that the Irish State does not want it to pay taxes in Ireland, raises deep questions about the structure, fibre, and trajectory of the post-modern state in the 21st century.

Philosophical inquiry in the ethics of taxation is almost as old as philosophy itself, with Plato commenting in Book I of the Republic that: “When there is an income tax, the just man will pay more and the unjust less on the same amount of income”.

Not surprisingly many moral philosophers today still feel that taxation is a necessary evil.

Three reasons in particular stand out: Citizenship; solidarity; justice.

One reason why taxation is indispensable is that it defines citizenship. To be a citizen is to be a member of a political community. As such, citizens are endowed with a set of rights, but also duties. Being a citizen is to enjoy the luxury of state protection, which can be the difference between life and death. The fact that thousands of people every week risk their lives in the waters of the Mediterranean in search of this elusive good is a constant reminder of the value of citizenship. But this protection comes at a cost, and taxation is what makes it possible for us to enjoy protection and prosper in our community.

Whether the benefits of citizenship are a compelling reason for Apple and other multinationals to pay taxes is debatable. A multinational company does not engage with a sovereign state the way an individual citizen does. What is at stake here is not citizenship, or membership, or national identity. Furthermore, Apple can always retort that its employees pay taxes, like everyone else, so the burden of judgment falls on the individual, not the company.

Another reason in favour of taxation is that it enhances a spirit of solidarity. By virtue of making a contribution towards the common good all those who pay taxes within a community develop a common bond: Cementing trust, built upon the principle of reciprocity. Taxation — like giving blood — fosters a sense of camaraderie, which in turn defines our social identity and delineates our place in society.

Once again, one should not be surprised if a multinational corporation is not bothered by the imperative of solidarity. Multinationals are businesses, full stop.

Heather Bresch, the chief executive of Mylan, the owner of the allergy treatment EpiPen, justified her company’s recent decision to raise the price for a pack of two EpiPens six-fold to $600 simply by stating the obvious: “I am running a business. I am a for-profit business”; and in doing so reminded us all once again of the oxymoronic nature of that strange creature known as ‘business ethics’.

But there is one more reason why taxation is a good idea, strictly on moral grounds: for the sake of social justice.

A key function of taxation is to affect the distribution of income and wealth. Unfair distributions of income, or dangerously unequal accumulations of wealth, can and ought to be corrected by taxation. Inequality is perhaps the major threat the West is facing today, more so than Islamic terrorism or nuclear threats from rogue despots, and taxation is one of the most effective tools to reverse this growing, social malignancy.

Apple may not feel a duty to support the cause of global justice, but Ireland, and the EU, ought to. Some things are simply too important to be left in the hands of private entrepreneurs.

Apple may not be asked to repay the €14 billion in taxes to the Irish State. If that turns out to be the case, and history suggests that will be the most likely scenario, it will not be the end of civilization as we know it, nor the start of the end of civilization. But it will be a further step along the path that is propelling us towards a grotesquely inegalitarian brave new world.

Social justice is not a commodity but a principle worth fighting for, and there is no place for iTaxes in a just society.

Vittorio Bufacchi is a senior lecturer in the Department of Philosophy at University College Cork. He is author of Violence and Social Justice (Palgrave) and Social Injustice — Essays in Political Philosophy.


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