We should feel sorry for Mr. Jacaboni because his accountant cheated on him. His account KPMG firm cheated him on entering into a deal that was not legitimate. The deal was meant to shielding his company against making the actual corporate taxes to IRS. The accounting firm promised Jacaboni that IRS would not be found. It is after the deal that he suspected that the deal was bogus as it amounted to tax evasion. His company was using the legitimate tax shelter in order to make unlawful gains. His company at the end of the deal managed to save millions of dollars through illegal tax shelter. It is, therefore, clear from the explanation that his accountant cheated on him by making him to believe that the illegal tax shelter transactions were legal while in real sense they were not.
Tax shelter should not be made legal and they should be abolished with an aim of protecting the country from tax evasions, which is on the rise in the recent past. From the article, it is very clear that the country is losing billions of dollars through illegal tax shelters. Hundreds of companies are using this strategy of tax shelter to reduce their corporate tax obligations with a very big margin. There is no need of making legal tax shelter as companies end up using them to their advantage, by evading their obligation of paying huge corporate taxes.
In order to have a fair income tax system in the country there should be a situation where all individual and corporations are paying the actual taxes that they opt to pay without anyone using tricks to evade tax obligations. Therefore, in order for a tax system to be fair, it should be designed in such a way that there are no loopholes that can be used by individuals to evade their tax obligations. A fair tax system should also take into account the level of income that an individual is earning before deciding on the amount of tax rate to use. Fair income tax system should be in such a way that individuals with higher incomes pay higher taxes in comparison to the individuals who have low income.
All members of the society have the responsibility of paying fair share of their tax. According to the article, all members of the society will realize progress in the society through faithfulness in payment of taxes. The collecting of taxes should be well managed. Therefore, it is the responsibility of each member of the society to pay his fair share of the tax, with an aim of contributing in the progress of his/her society.
Organizations should pay fair share of their tax obligation. The services that organizations enjoy such as, provision of security and development of appropriate infrastructure largely depends on the taxes that they pay, therefore, it would be unethical for them to evade paying their fair share of tax obligations. If the firms are to benefit from government services, they should contribute in paying for the services through meeting their tax obligations.
Additionally, fairness in payment of taxes can be determined through amount of taxes that individuals and corporations are charged on their income and profits respectively. A tax system cannot be fair if it allows many individuals to evade payment of taxes or the amount of tax they are supposed to pay is not proportional to their income. The higher the income of an individual, the higher the tax rate on his/her income. This would ensure fairness in payment of taxes. Therefore, the levels of income should be used as a criterion for determining the structure of a fair tax system.
