A Brief Question Concerning Business Ethics

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Reading through the news earlier, I ran across this headline: Wal-Mart Owes Back Taxes…. The headline and the beginning of the article make it sound as though Wal-Mart is doing a bit of cheating as far as paying their taxes.

But there’s catch. Wal-Mart isn’t technically cheating. Well, maybe not. They don’t think they’re cheating. There seems to be a loophole in the tax law in Wisconsin, and this loophole allows Wal-Mart (or any business) to do the ol’ switcheroo and not pay a whole lot of money that they probably should pay. Obviously, the state Revenue office disagrees with the way Wal-Mart is reading the loophole and things are underway to fix this little glitch.

It’s easy to hate Wal-Mart because they are big business and seem to have a shady history as far as putting competitors out of business (and not paying overtime [and selling dog food that is dangerous for dogs to eat]), but okay. Just curious as to the ethics involved in this, as I don’t have a business mind and don’t really understand the whole save-money-any-way-you-can mentality. On one hand it seems smart business. On the other, it seems like a big business trying to get the business of a community without contributing their fair share of taxes.

So my ethics question of the day: Is it fair to demand payment from Wal-Mart even if what they did was technically legal?

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13 Responses to “A Brief Question Concerning Business Ethics”

  1. alsturgeon Says:

    Well, I’m with you, Mikey, what with my non-business-wired mind and all…

    But as to ethics, me thinks it depends on one’s moral standard.

    Based on what I read in the article, I think what Wal-Mart is doing in unethical (as to my standards). Yet I would answer your final question, No. If what they are doing is technically legal, then there you have it.

    Our country purportedly exists under a “rule by law” approach (Gonzales, et al, notwithstanding), so if it’s legal, then the only thing left to do is change the law.

    My thoughts.

  2. michaellasley Says:

    You just want to have it both ways, Al. Believe one thing and do another. I see how you are.

  3. alsturgeon Says:

    I’m a waffler.

  4. DeJon Says:

    mmm. Waffles.

  5. alsturgeon Says:

    I buy my waffles at Wal-Mart. They have good waffles at reasonable prices.

    Because I, after all, like to have my waffles, and eat them, too.

  6. urbino Says:

    I heard their waffles are made in China.

  7. urbino Says:

    I think I’m with Waffler Al on this one. I don’t like it, but if the law is written in such a way to make it possible, then the cheeseheads have to live with it or fix the law. I think it was the estimable Judge Learned Hand who said no one is ethically bound to pay more in taxes than the law demands.

    The American companies I have trouble with are the ones who benefit from American law, stability, and so forth, but have arranged it so they don’t provide any jobs here (except for CEOs and secretaries) and don’t pay any taxes here.

    In that regard, I disagree with the judge.

  8. Capt. Midknight Says:

    Thanks to Urbino for the Learned Hand quote. It’s been bouncing around in my head ever since I read Michael’s post, but I couldn’t remember the source. Another quote that comes to mind – I can’t remember the source of this one either – is “Nations don’t have friends: They have interests.” Large corporations are very much the same, especially when they get as big as Wal Mart.
    It’s not hard to imagine the corporate reaction to a Wal Mart Regional VP trying to explain, during his annual review, that he passed up several million in additional bottom line revenue because he felt bad for the local folks that their legislators didn’t tighten up that tax law a little more. It’s finding things like this that help all those corporate lawyers earn their keep.

    Michael’s last question is the crux of the problem – “Is it fair …” Who gets to define “fair?” The best we can do is elect folks to make laws. The unwritten agreement is that, in spite of our different standards of morality, we (the people) agree to accept the laws our representatives pass as defining “fair”in those cases. If it turns out that we don’t like how the law, or maybe some of it’s “unintended consequences,” works out, we can change to law to something we like better. That’s why I think the term “Justice System” is something of a misnomer. We actually have a Legal System. We (the people) agree on laws in the hope that, if these laws are properly enforced, some measure of Justice will result. Given the fallible nature of man and his institutions, that may be the best we can hope for.

    Unfortunately, we have groups today that insist that their view of “Justice” supercede the law. In the Wal Mart case, they say that, even though what Wal Mart did is technically legal, they should be punished. In the case of illegal immigrants, even though what they did is obviously illegal, they shouldn’t be punished. The underlying reasoning is: “My (or my group’s) concept of right and wrong is so obviously correct and superior that only ignorant or dishonest people would disagree with it. Therefore, it has a moral force greater than law.” I believe that Urbino called them “True Believers,” and no political or religious group has a monopoly on them.

    Sorry if I took the comments in a more serious direction.

    Also, Al, I just couldn’t figure a way to work waffles in here, although I do love them too.

  9. alsturgeon Says:

    Serious is good. Some people take waffles seriously, but I just don’t. They give me indigestion.

  10. urbino Says:

    Thanks to Urbino for the Learned Hand quote.

    Don’t thank me too much, Cap’n. I’m not sure of that attribution.

    The rest of your comment raises lots and lots of interesting issues, but contrary to my habit, I’m not going to annoy everyone by pursuing all of them. I’ll just say the distinction between “Justice System” and “Legal System” is one the courts are aware of and take into account in deeply systematic and procedural ways.

    I’ll also say that while, in theory, you’re right about the chain from voters to lawmakers to laws to behavior, there’s a great deal of “wobble” in each of those links, with the result that sometimes courts are forced to try to do “justice” within a bad law. Some people categorize all such cases as “evil judicial activism.” That’s one valid approach. I’m not sure it’s the one even those people really want courts to take, given the “wobble” in all the other links in the chain.

  11. michaellasley Says:

    Good stuff, Cap’n and JU. Making me think out here on the beach.

    Al, not so much. I joke! I joke!

  12. aliasheea Says:

    It’s easy to hate Wal-Mart because they are big business and seem to have a shady history as far as putting competitors out of business (and not paying overtime [and selling dog food that is dangerous for dogs to eat])

    Unfortunately this is very true. Also it’s easy to hate Wal-Mart because part of their business strategy is to set up shop in a small town, where they negotiate a huge tax cut because of all the business and jobs they bring to the small town. Then, if the tax break is for say, 10 years, at nine years they will close down their store and move to another location. Brilliant huh? Now they’ve gotten out of taxes for nine years and are free to negotiate a new store in a new small town. Plus there is an empty building sitting there that is no longer being used. And business journals and papers write articles on Wal-Mart’s smart money-saving tactics. Now deep inside this feels deplorable, especially when added to the other “money-saving” techniques Wal-Mart employs. So even when I hear of a legal loophole I feel a little angry inside that once again Wal-Mart has pulled one over on someone.

    But… on the other hand, where else can I go and get a blender, waffles (I guess I have to add that in there now), paint, and tainted dog food? Plus I can get my oil changed while I shop! It’s definitely a love/hate relationship. With three kids I love having to only make one stop, and Wal-Mart is passing some money-saving on to me. So who am I to complain while I go there two to three times a week?

    And how come it’s light outside when I go in Wal-Mart, but as the flourescent lighting sucks the life out of me and I stop to look at the new books and movies out that week, I leave and it’s strangely been 3 or more hours and it’s dark outside? And how come everyone is getting kidnapped at Wal-Mart these days? Just some interesting Wal-Mart related topics to keep it going.

  13. urbino Says:

    And how come everyone is getting kidnapped at Wal-Mart these days?

    It’s probably because WM is a front for Iranian terrorists. We should declare war on WM.

    You raise another good point on the buildings issue. It peeves me no end to see all those abandoned eyesores all over the place. As you point out, though, until voter/shoppers decide it’s a big enough deal that they pressure their local government to put a stop to it, it’s perfectly legal for WM to operate that way.

    Ethical, though? I’m inclined to think not.

    I’m allowed to say that, though, because I don’t believe “free markets” ought to get to decide everything or that whatever free markets decide is right (and therefore, by definition, ethical).

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