How legal scholars facilitate tax avoidance: Case study on the power of tax consultancy firms

Abstract

Social scientists have neglected the ways in which the consultancy assignments of legal scholars mediate private interests, even though their opinions provide important guidance in legal proceedings. Through a case study from Finland, we document a process where private tax advisory firms utilize their access to academic forums to defend their clients' interests. With further evidence on related dependencies, we trace a twofold process that amplifies the voice of tax advisors and suppresses public interest‐related concerns. By achieving positions of trust in the academia, tax consultancy firms gain important gatekeeper roles that facilitate corporate‐friendly research and subdue critical arguments. The findings challenge the conventional understanding of the dynamics of knowledge production and call for a greater attention to the pitfalls of the marketization of academic legal advice and scholarship. The national‐level interpretative power of major tax advisory companies is also an important building block for international network power.

Consultancies in public administration

“…It typically depends on specialized and technical knowledge, replicated through disciplines, and institutionalized in professional groups that control “jurisdiction” over specific tasks (Abbott, 1988). The role of academic consultants, including in this symposium (Laage‐Thomsen, 2022; Raitasuo & Ylönen, 2022), continues this command over expertise through professionalization tied to occupational training and specialized abstract knowledge (Ban & Patenaude, 2019). However, if we are concerned with recognition as a claim to control a task, we need a broader conception.…”

“…On this basis, they argue that explanations drawing on transaction cost theory need to be supplemented by incorporating insights from social embeddedness theory to capture how "over-selling" an "over-buying" external consulting can generate sub-optimal outcomes. With a Finnish case, Raitasuo and Ylönen (2022) analyze the micro-level dynamics of how tax advisory companies draw on the expertise of legal academic consultants to advance their clients' interests. They show how tax advisory firms utilize their access to expert fora to defend their clients' pecuniary interests, detailing how public-interest concerns are marginalized and the interests of tax advisory companies promoted.…”

“…With a Finnish case, Raitasuo and Ylönen (2022) analyze the micro‐level dynamics of how tax advisory companies draw on the expertise of legal academic consultants to advance their clients' interests. They show how tax advisory firms utilize their access to expert fora to defend their clients' pecuniary interests, detailing how public‐interest concerns are marginalized and the interests of tax advisory companies promoted.…”

Lobbaus ja verosääntely

“…Veropolitiikka on keskeinen politiikan alue, joka on kuitenkin tyypillisesti jäänyt politiikan tutkimuksen katveeseen. Alan akateeminen tutkimus on viime aikoina laajentunut (Finér 2022;Raitasuo 2022;Raitasuo ja Ylönen 2022;Ylönen ym. 2020).…”

Assets in Periphery, Agents in the Core: Mapping the Micro Structures of International Tax Planning

“…The existence of tax avoidance and offshore finance in 'global wealth chains' rely not only on offshore financial centers, but requires tax advisors who create and maintain the tax avoidance schemes necessary to reach them Wigan 2017, Christensen, Seabrooke, &Wigan 2020). Tax advisors are recognized as key to international tax as 'wealth defenders' or 'suppliers' in Global Wealth Chains (Raitasuo and Ylönen 2021, Ajdacic et al 2021, Harrrington 2016, Wigan and Seabrooke 2017. Previous studies have illustrated the role of these actors in both private wealth management (Harrington 2016, Beaverstock, Hall andWainwright 2013) and corporate tax avoidance, emphasizing in particular the role of the Big Four accounting firms (Carter et al 2015, Ajdacic et al 2021).…”