Ethical Leadership in the Taxation Profession - Term Paper Example

Ethical Leadership in the Taxation Profession Theoretically, ethical standards are requisite measurements used to foster professional accountability and responsibility in workplaces. In practical settings, workplaces are often crippled with unethical practices. This paper introduces the profession of Operating Tax for Commercial Transportation, together with the ethical problems commonly encountered within the profession. Problems suggested within the essay are hypothetical in nature, and are included only for illustrative purposes. Subsequently, a detailed discussion on the role of ethical leadership was conducted. Benefits as well as setbacks resulting from ethical and unethical leadership are mentioned respectively. In addition, the role of ethical decision making in the management of public institutions is illustratively explored. Also, relevant moral frameworks and guidelines for decision making like the utilitarian approach, and the common-good approach are explored sufficiently. Moreover, a personal perception on ethical leadership is demonstrated through the hypothetical problems identified in preceding sections of the paper. Finally, the paper closes with analysis of short-term and long-term recommendations, on how to improve the unethical problems within the Operating Tax for Commercial Transportation profession. Introduction In the United States, most jurisdictions have legislations that allow for taxation of commercial transport businesses. Tax imposed on commercial transport businesses is commonly referred to as commercial transportation tax. In an effort to increase their revenues, legislations in certain states like Virginia necessitated imposition of levy fees on commercial vehicles like delivery cars, trucks, and earth moving machines among others (Lindsey, 2008). Occasionally, vehicle weight is used as criteria in determining the amount of tax payable by the commercial vehicle operator. For instance, commercial vehicles with a weight exceeding 26,000 lbs are normally required to file tax returns to appropriate state authorities. In addition, light motor vehicles like city passenger transport cars are required to file for tax returns based on the millage parameter. In this context, it is worth acknowledging that commercial transportation tax applies only for motor vehicles and other means of transportation that carriers goods or passengers for a fee. Private vehicles, school busses and government fleets are exempted from this type of levy. During implementation of tax policies for commercial transportation, unethical practices are often reported (Brown, 2012). Therefore, it is worth analyzing the depth and breadth of unethical practices within the context of public taxation. Responsibilities and Goals of the Tax Professionals In the process of implementing taxation laws and ensuring compliance by commercial transportation companies, state revenue departments usually hire professional tax officers. The main reason for hiring professionals is to ensure efficiency in tax collection, and eliminate technical hitches arising from unethical practices within the public revenue offices. Admittedly, most states seek to increase their revenues in order to meet their domestic budgets. In this case, revenue offices within a state may be tempted to increase their revenues by imposing excessive tax regulations that may violate certain social and economic principles within the state. In this context, professional tax officers are responsible for formulation and subsequent implementation of revenue collection mechanisms. The profession of Operating Tax for Commercial Transportation entails management and implementation of taxation regulations for commercial transportation systems. Among the social responsibilities of professionals within the commercial transportation tax offices include but not limited to, preparation of ethically sound tax reports, and ensuring sustainable compliance through objective auditing of tax schedules and reports. In the field of taxation, tax avoidance feature as the main problem encountered by revenue officers. In practical contexts, some commercial transportation firms may disguise the nature of their commercial businesses as a means of evading tax responsibilities. In an effort to maximize their profits, companies within the commercial transportation sector may avoid taxation for an extended period of time. Eventually, revenue departments will incur substantial losses exacerbated by shortcomings in revenue collection processes. Often, employees within revenue departments may unethically assist tax payers in avoiding the payment of tax (Robert, 2014). Typically, ineffective revenue regulations provide loopholes through which tax avoidance practices proliferate. It is usually the duty and responsibility of tax officers to ensure effective implementation of tax laws, and to weed out unethical practices within a revenue system. In this context, objectives of project managers within the Operating Tax for Commercial Transportation profession include management of tax policies, sealing of leaks which allow for fraudulent tax evasion practices, and ensuring prevalence of professional integrity as a means of maintaining effectiveness of taxation systems. Prior to acknowledging examples of hypothetical situations commonly encountered in revenue systems, it is worth evaluating the ethical values and principles adopted by professionals within a taxation system. Undeniably, tax officers are public servants whose duties and responsibilities demands strict adherence to predetermined codes of professional conduct (Cooper, 2014). The most important duties of taxation project managers include facilitating formulation and effective implementation of tax compliance activities, responding to public appeals whenever taxation mechanisms suffer from technical hitches, and creation of a suitable environment for sustainable growth of corporate integrity (Brooks & Dunn, 2009). In performing their duties, taxation project managers must make a lot of decisions, some of which may cause conflict of interests. Conflict of interest may not only lead to subjective decisions, but may also impair effective delivery of professional duties. Often, professionals dealing with conflict of interests are faced with moral dilemmas. A conflict arises whenever personal interests cloud one’s judgment, thus increasing the chances of unethical decision making (Robert, 2014). Despite conflicts of interests being inevitable, public officers are still required to maintain professional integrity because ethical conduct is part of professionals’ job responsibilities. Hypothetical Problems encountered within the Tax Profession Hypothetically, problems encountered by taxation officers may include lack of cooperation from taxpayers, and deliberate deception for personal gain. Professionals within the field of Operating Tax for Commercial Transportation encounter tough obstacles whenever clients demonstrate lack of cooperation. For example, tax officers tasked with enforcement of commercial transportation tax regulations may fail to perform their duties because taxpayers deliberately withhold tax return files. In most cases, taxpayers may hurl abusive statements to tax policy enforcement officers as a means of discouraging the officers’ persistent enforcement approaches (Lindsey, 2008). In response, the enforcement officers may promptly counter provocative gestures from taxpayers through unethical approaches like offensive threats, or even assault. Professionally, taxation officers are expected to act politely towards taxpayers, even in the face of personal stress and provocation. Under whatever circumstance, display of discourtesy towards taxpayers by tax policy officers amounts to violation of ethical codes of conduct. Undeniably, tax policy officers work under tough conditions, especially when the public taxpayers have negative perceptions towards revenue collection systems. Therefore, personal provocation and subsequent exchange of words between tax officers and taxpayers are not uncommon. In addition, another hypothetical example of professional problems encountered by taxation officers is the use of deception, and fraudulent mechanisms for personal gain. Taxation officers are often involved in financial audits. During auditing, tax officers may be bribed heftily to misrepresent financial reports. For example, two tax officers may be send to audit a subsidiary branch of a multinational commercial transportation corporation. During the audit, the officers realize a tax return inconsistency amounting to $20 million. In an effort to avoid prosecution for tax evasion, the company’s managers offer bribes amounting to $1 million to each of the two tax officers. Since the tax officers earn $100,000 annually, the $1 million offer will be too tempting for them to refuse. Because of the hefty amounts of money used in bribing taxation officers, most officers succumb to the bribe pressure (Lindsey, 2008). Unfortunately, most cases of bribery and deliberate deception in tax reports go unnoticed. In an effort to maintain integrity, revenue department managers rely on the genuine goodwill of taxation officers to make ethically sound decisions. Undeniably, the forbidden fruits are often sweeter that the permitted ones. This means taxation officers within the Operating Tax for Commercial Transportation sector face moral dilemmas on regular basis (Ferrell & Larry, 2010). Nonetheless, ethical codes of conduct must be invariably maintained; hence morally conflicting decisions must be made under such provocative and tempting circumstances. Ethical Leadership In both the private and public sectors, leaders feature as the main pillars of integrity and ethical codes of conduct within an organization’s workforce. Unfortunately, power corrupts. In practical contexts, leaders are surrounded by multiple temptations, which are often of material or emotional nature. Based on the fragile nature of human emotions, most leaders invariably succumb to desirable enticements of corrupt practices. In this case, ethical leadership could be harder to find in practical settings than purported. In managing public finances, the importance of trust, fairness, honesty, and equity in leadership cannot be overemphasized (Brooks & Dunn, 2009). Success of public organizations relies on the ethical inclinations of the organizations’ leadership. Whenever leaders act in accordance with ethical codes of conduct, hypothetical problems similar to those illustrated in the preceding paragraphs can be avoided. However, unethical practices by leaders erode honor and public trust of an organization. Admittedly, leaders are role models to subordinate employees. Therefore, professional conduct demonstrated by subordinate employees is a mirrored reflection of the leadership. Ethical leaders facilitate germination of truth, and growth of professional integrity within an organization. Contrarily, unethical leadership drops venomous portions of moral toxics into an organization’s pool of employees (Joanne, 2014). As a result, the pool of employees will flourish with debilitating practices that undermine an organization’s integrity in the society. Undeniably, ethical leadership is not sourced from vending machines of moral principles. Ethical leadership thrives from an individual’s inclination towards morally sound principles. Frequently, individuals encounter morally challenging situations which demand for finite decision making processes (Robert, 2014). An individual’s inclination or disinclination towards moral goodness will determine whether or not the resultant decisions will be ethical. For example, project managers within the Operating Tax for Commercial Transportation profession possess unlimited powers during planning and implementation of taxation policies. The unlimited powers increases the managers’ potential of breaching ethical boundaries (Cohen, 2004). In such contexts, likelihood of ethical breach depends on a leader’s moral strengths and weaknesses. Often, a manager falls into a moral dilemma faced with two choices; either report a tax evasion crime based on audit inconsistencies, or report deceptive findings after taking a large bribe. In this context, reporting the tax evasion crime is ethical, but lacks in personal rewards associated the alternative option. Contrarily, taking a bribe comes with a desirable personal gain, but feature as an unethical alternative. Therefore, objective moral frameworks should be employed in resolving such decision dilemmas in public policies (Jones, 2011). Moral Frameworks for Decision Making Technically, making ethical decisions require a deep comprehension of moral frameworks applied in management of public institutions. In unfamiliar moral dilemmas, ethical decisions are derived from procedural moral approaches. Among the most popular moral approaches in public policy include the common-good approach, and the utilitarian approach among others. In decision making, each of this approach has specific strengths and weaknesses. The utilitarian approach is a moral guideline dating back to the ancient times of Greek philosophers. Utilitarian approach separates good outcomes from allegedly evil outcomes (Cohen, 2004). Once the two categories of outcomes have been distinctively separated, an ethical decision is derived by establishing the greatest balance between good over evil choices. The nature of an outcome is determined by ascertaining benefits and corresponding harms associated with each choice. Whenever benefits outweigh harms, then a morally sound decision materializes. Occasionally, some decision may possess benefits and setbacks in equal proportion. In such cases, the utilitarian approach proves impractical in ethical decision making; hence necessitating application of other appropriate moral frameworks. With respect to the profession of Operating Tax for Commercial Transportation, utilitarian approach could prove instrumental in resolution of ethical dilemmas. For example, taking a bribe during tax audit exercises benefits a project manager at a personal level, and the bribe payer avoids punishment. However, harms associated with taking a bribe include fraud, misuse of public funds, and economic endangerment of public institutions. Contrarily, reporting a crime proves beneficial by incarceration of tax evaders, and maintaining integrity within an organization. Actually, no harm results from reporting the tax evasion crime. In fact, reporting a tax evasion crime helps in combating vices of unethical practices in a department’s taxation system. Consequently, elimination of unethical loopholes will not only yield additional revenue, but also improve a department’s reputation on the eyes of the public taxpayers. As aforementioned, utilitarian approach requires that an ethical decision should possess the greatest benefits over harms (Jones, 2011). Therefore, utilitarian moral approach is responsive in decision making because it has ascertained that reporting the tax evasion crime is ethical as it offers multiple benefits, and lacks in any harms. Besides utilitarian approach, the common-good approach feature as another effective decision making tool in leadership. The common-good approach relies on values adopted by the mainstream portion of the society. In essence, this is a community-based framework which seeks to uphold pursuit of alternatives that offer the greatest benefits to most members of the society (Jones, 2011). This approach permits for selection of alternatives that harm a merge portion of the society, and preserves desires of the majority. In practice, common-good approach is often compromised by consideration of private interests over communal interests. For example, the decision to take a bribe suits private interests. Contrarily, reporting the tax evasion crime is in harmony with communal interests. Therefore, a trade-off must be deduced by the decision maker, between communal interests and personal interests. In order to value communal interests over private interests, decision makers must have a significant degree of compassion towards other members in the society (Joanne, 2014). Lack of compassion and respect towards others will result in selection of selfish alternatives (Smith, 2011). Contrarily, respectful and compassionate leaders will sacrifice the pursuit of selfish ambitions over the goodness for all. Leadership in Operating Tax for Commercial Transportation Profession As insinuated earlier, practical application of ethical principles in workplaces depend on the role played by leaders in motivating other employees. First, it is worth acknowledging that in the context of public administration, leadership is different from management. Managers influence the professional behaviors of employees through direct authority, and corresponding punishments. On the other hand, leaders entice employees to adopt certain professional behaviors without necessarily using authoritative and punitive means (Ferrell & Larry, 2010). Technically, leaders are not necessarily managers. In the context of professional ethics, even team members can play leadership roles. For example, a subordinate taxation officer can foster ethical leadership by encouraging his or her fellow workers to act ethically. On the other hand, managers can still foster ethical behaviors by acting exemplarily in dilemma situations. Typically, subordinate employees are professionally required to follow the footsteps of their leaders and managers. Friendly and morally upright leaders attract a large number of followers compared to leaders with considerable desire and tendencies towards unethical practices (Joanne, 2014). As a Team Member As a professional within the Operation Tax for Commercial Transportation, I would use my charismatic appeal in steering my team towards the right ethical direction. In essence, team members often motivate and inspire each other in their professional undertakings. Team members known to make morally upright decisions often have followers because their behavior inspires other members to act rightly. As a team member, I would strive to inspire other tax officers through exemplary work performance, and creation of team loyalty. Undeniably, exemplary performance of duty is an influential attribute in the taxation profession. Therefore, I would stand against unethical practices like taking of bribes at all costs. In addition, I would encourage friendliness and professional loyalty between members of my team. Creation of loyalty features as a practical means of fostering team work. As a team member, I would propose and organize for regular team building exercises. Through team building, a solid professional team will be consolidated through team loyalty. In times of ethical dilemmas, team members will be more likely to sacrifice personal interests over team values (Linda, 2007). As a Leader As a leader within the Operating Tax for Commercial Transportation department, I would employ ethical principles in enhancing emotional and psychological well-being of other employees. Based on previous leadership research, empirical findings showed that employees’ satisfaction rely on the motivating and inspiring attributes of their workplaces. Essentially, leaders are responsible for fostering an inspirational atmosphere within a workplace. Whenever unethical practices like bribery and fraud in taxation proliferate, employees will experience senses of betrayal and misplaced loyalties from unethical team members (Ferrell & Larry, 2010). However, presence of ethical code of conduct within a workplace enhances employees’ commitment towards an organization’s corporate goals. As a leader, I would provide incentives for ethical behaviors. Tax officers who demonstrate the closest adherence to ethical codes of conduct will be rewarded through cash bonuses and appropriate promotions. In addition, I would encourage ethical conduct through modeled behavior. In professional settings, subordinate employees often look up to their leaders for guidance. In this case, one way of implementing modeled behavior would involve placing emphasis on the department’s ethical principles during weekly meetings. Whenever the benefits of ethical principles are reiterated by the leadership, employees are highly likely to follow (Joanne, 2014). As a Follower As a follower for the department’s leadership, it is worth staying close to leaders who are fond of encouraging strict compliance to ethical standards. One example of ethical standards within the taxation profession is objective reporting of tax returns. Often, officers tasked with enforcement of tax policies may misrepresent facts after taking bribes from taxpayers. In such cases, fraudulent behaviors among employees will not remain buried for long, and are eventually realized by their fellow employees. Practically, leaders may not be within the closed cycles of subordinate employees; hence they may never learn of the unethical behavior perpetrated behind their backs (Brooks & Dunn, 2009). However, other subordinate employees who are privy to the unethical behaviors can be perfect sources of information to the leadership. Therefore, leaders must establish venues and mechanisms through which unethical behaviors can be anonymously reported by concerned members of the organization. Subsequently, leaders can objectively investigate complaints of unethical behaviors, and implement appropriate punitive actions to perpetrators of unethical conduct within the tax department. Conclusion In conclusion, it is undeniable that implementing ethical principles within a public organization is not as easy as expressed in theoretical discussions. For example, changing unethical practices within the Operating Tax for Commercial Transportation department may prove difficult because the practice of tax fraud may be deeply entrenched into the organization’s culture (Linda, 2007). In this context, appropriate short term and long term strategies may be necessary in eliminating the unethical vices. One recommendable solution for the short-term period is implementation of accuracy measures for tax reports. After submission, accuracy of each tax report should be verified by an independent auditor. In such cases, employees with unethical behaviors will avoid inclusion of deliberate errors in their reports because the accuracy measures will invariably detect deception in reporting. In the long-term, a spirit of professional accountability can be restored by inclusively integrating ethical standards during recruitment and hiring of new employees. The future of any organization depends on the professional effectiveness of young employees. When the old, unethical workers retire, the vice of fraud within the taxation department should go with them (Linda, 2007). The newly recruited employees must be the forbearers of the needed change within the department. In this regard, appropriate short term, and long term solutions should be implemented in mitigating effects of unethical decision making within the Operating Tax for Commercial Transportation department. References Brooks, L. & Dunn, P. (2009). Business & Professional Ethics for Directors, Executives & Accountants. New York: Cengage Learning. Brown, M. T. (2012). Corporate Integrity: Rethinking Organizational Ethics and Leadership. Cambridge, Massachusetts: Cambridge University Press. Cohen, S. (2004). The Nature of Moral Reasoning: Framework and Activities of Ethical Deliberation, Argument, and Decision Making. London: Oxford University Press. Cooper, T. L. (2014). Achieving Ethical Competence for Public Service Leadership. London: Rutledge Publishing. Ferrell, C. & Larry, G. (2010). A Contingency Framework for Understanding Ethical Decision Making in Public Administration. Journal of Public Policy, 49 (3), 215-228. Joanne, B. C. (2014). Ethics, the Heart of Leadership. 3rd Ed. Pittsburg: ABC-CLIO Publishing Ltd. Jones, T. M. (2011). Ethical Decision Making by Individuals in Organizations: An Issue-Contingent Model. Academy of Management Review, 16 (2), 367-381. Linda, S. (2007). Ethical Leadership for the Professions: Fostering a Moral Community. Journal of Business Ethics, 78 (4), 82-89. Lindsey, W. (2008). Blue Book: General Explanation of Tax Legislations. New York: John Wiley & Sons. Robert, Solomon. (2014). Ethical Leadership, Emotions, and Trust: Beyond Charisma. Pittsburg: ABC-CLIO Publishing Ltd. Read More