Ethical and Legal Responsibility of Multinational Corporate Groups for a Fair Share of Taxes

Abstract

This paper deals with the question whether there are reasons to deem multinational corporate groups ethically or legally responsible for paying their fair share of taxes. Ethical concepts argue that companies should generally be held responsible, but these findings contradict the mainstream market theory that understands companies as legal fictions and therefore not ethically but merely legally responsible. In contrast, we base our argumentation on the political-cultural market theory. We find that this theory provides reasons to ascribe an ethical responsibility for paying their fair share of taxes to multinational corporate groups. We argue, moreover, that this ethical responsibility also speaks for a legal responsibility. The prevailing tax law, particularly the arm's length principle, does generally not see groups as tax subjects. This currently missing legal responsibility gives reasons to rethink tax law. Therefore, we analyze whether the OECD Pillar One proposal may be an alternative to existing law.

Ebbs and Flows of Securities Fraud Litigation: Empirical Examination of Post-PSLRA Frequency & Severity Trends

“…A potential alternative explanation of the gradual uptick in the annual incidence of shareholder litigation might be the gradual broadening of the scope of disclosure materiality. More specifically, traditionally rooted almost exclusively in financial performance measures, the definition of what constitutes 'material disclosure' is now beginning to encompass non-financial environmental, social justice, and governance, jointly known as ESG, considerations (Banasiewicz, 2015;Morris et al, 2012;Scherer & Schmiel, 2021), resulting in public companies having to content with a broader array of potential securities litigation triggers, ultimately manifesting itself in higher average frequency of SCA litigation. A similar, ebb and flow upward trending pattern characterizes the second key facet of shareholder litigationseverity, graphically summarized in Figure 3.…”

“…Though relatively infrequenton average, around 4% of companies traded on U.S stock exchanges incur securities litigation annuallythose suits can nonetheless result in substantial, i.e., multi-million, even multi-billion-dollar, losses, not to mention negative publicity (Chen, 2010;Gertsen et al, 2006). To make matters worse, the traditionally financial disclosures focused scope of what triggers SCA is expanding, as what investors consider to be 'pertinent' and 'material' information is now beginning to encompass not only financial performance related disclosures, but also those addressing the increasingly more important environmental, social, and governance (ESG) considerations (Banasiewicz, 2015;Scherer & Schmiel, 2021). In particular, organizational disclosures addressing policies and practices reflecting companies' sustainability related choices along with social fairness and equality related efforts are playing an increasingly important role (Saad & Strauss, 2020).…”