Ethical Reasoning in Tax Practice: Law or is There More?

Private sector tax practitioners are often accused of unethical behavior in developing contrived tax avoidance arrangements. Such arrangements usually comply with the letter of the law but contravene its underlying (often unstated) ‘spirit’. Prior research comparing the ethical reasoning of private sector tax practitioners, government revenue tax practitioners and a non-tax (control) group in both social and tax contexts found no significant differences between them in a social context. However, where tax dilemmas were concerned, private sector tax practitioners demonstrated lower levels of ethical reasoning. We seek here to examine whether this difference results from the regard private sector tax practitioners have for the law – in other words, whether they have a law and order orientation when facing ethical issues or whether the professional context offers other motives. Using the Defining Issues Test (DIT) and a tax-specific context version of the DIT, we test whether there is a law and order dominance in the ethical reasoning of private sector tax practitioners in both tax and social contexts, in comparison with government revenue tax practitioners and a non-tax control group.