How do tax preparation techniques compare with bankruptcy techniques and what are the ethical implications?
Consider the following two scenarios. 1. Successful individual with six figure income and significant assets hires tax attorney/account to ensure every deduction and technique to reduce tax liability is explored and taken advantage. 2. Same situation as above but individual encounters serious financial downturn due to job loss or failed investments. Decides to exercise bankruptcy protection and hires attorney to ensure he is able to protect as many of his assets as possible and reduce financial liabilities as allowed by the legal process. Both have acted legally. Is there an ethical difference between them? Is there an ethical duty to pay taxes as required by a democratically elected government? Is there an ethical duty to pay private debt? Is there a difference between the two? Good answer; I ask because I recently heard an argument that people who use bankruptcy law to their advantage to resolve a financial problem are unethical or immoral.
Public Comments
- Taxes are a legal requirement, regardless of moral or ethical boundaries. The law also provides a number of deductions to the personal income tax. If the taxpayer meets the criteria, then deduct as much as you can, it's the American way. Bankruptcy is not required by law. It is however legal. One who practices bad business and intentionally leaves his debtors in the hole is morally and ethically wrong. But one who uses bankruptcy as it was intended is within their legal right. What I fiind interesting is that people complain to the govt about taxes, but then demand the social programs and roads and schools. I know nobody (Dem or Repub, rich or poor) who would be willing to pay debt that they don't have to. Bankruptcy allows them the latter option.
