The American manager in Italy was morally correct based on Kant’s three categorical imperatives1 even though the “Cultural Relativism”2 may put challenge on this statement.
First of all, the American manager refused to file the tax “Italian style”3 on the grounds that understating profit is dishonest and not in compliance with corporate practice4. As Kant’s first categorical imperative states - one should “act only on maxims which you can will to be universal laws of nature”5, the manager acted on the maxim that a corporation should be honest when reporting profits. Being honest is a principle that has been universalized – consider the exception, which was exactly what happened in Italy back then: as a “generally accepted Italian
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If necessary, also find out if it is possible to hire an independent 3rd party accountant to validate our company’s profit reporting. The bottom line is the manager should act more actively by acknowledging cultural moral difference and reach out to and work more closely with the Italian Tax Authorities. I would not hire the “commercialista” for two reasons: first, the commercialista does not provide detail information on how much was paid to the Tax Authorities and how much was retained by the commercialista as the service fee. This “information asymmetry”17 promotes abuse of power and deception. Without knowing the detail breakdown of the total amount paid, our company may end up paying much more than we actually owe. Second, the tax reporting and payment are corporate responsibilities that should be fulfilled by employees of the company but not by a commercialista. The commercislista does not have the company’s best interest in mind and hence has no incentive to act morally as a stakeholder of the company.
Last but not least, it is important to point out that the “Italian style” tax practice, though a cultural product in Italy, should not be considered moral simply on the ground that it is a “generally accepted practice in Italy”. Being honest and reporting actual profits and tax are a common tax practice worldwide and can be a universal law according to