Submitted by donald (not verified) on May 18, 2008 - 1:59am.
I had a random business tax idea a little while ago while reading about the Mondragon cooperative in Spain. The business is a large worker cooperative, or rather a network of affiliated cooperatives, and has been incredibly successful financially.
One of the hallmark features of the cooperative is set cap on wage differentials. The highest paid employee can only earn at maximum a set multiple of the lowest paid employee's wages. In Mondragon that ratio was 3:1, though they've increased it in the last decade (I believe it's capped at 7:1 today). Still a far cry from the differentials we see in American business.
Well, what I was thinking was that instead of a hodgepodge of policies and exceptions related to business taxation, it might be interesting to consider focusing on something like internal wage differentials. Main reason being that this would prejudice in favor of small business over more integrated corporations, and it would embed a level of rough equality into firms themselves. At a ratio of 1:1 or thereabouts, the business tax rate is negligible, and it gradually increases with the internal inequality of the firm. Shoot for a target of 8:1, perhaps.
It's a very rough suggestion. It'd have to be tweaked to prevent abuse by simply outsourcing to underfunded firms or contractors. But it does shift things a bit from a system of cobbled-together half-measures subject to rampant abuse, that clearly aren't adequate to the task. If we're going to decide that small business should be given some level of preferential treatment, then we should simply build it into the tax code directly.
Tax rates based on internal pay differentials
I had a random business tax idea a little while ago while reading about the Mondragon cooperative in Spain. The business is a large worker cooperative, or rather a network of affiliated cooperatives, and has been incredibly successful financially.
One of the hallmark features of the cooperative is set cap on wage differentials. The highest paid employee can only earn at maximum a set multiple of the lowest paid employee's wages. In Mondragon that ratio was 3:1, though they've increased it in the last decade (I believe it's capped at 7:1 today). Still a far cry from the differentials we see in American business.
Well, what I was thinking was that instead of a hodgepodge of policies and exceptions related to business taxation, it might be interesting to consider focusing on something like internal wage differentials. Main reason being that this would prejudice in favor of small business over more integrated corporations, and it would embed a level of rough equality into firms themselves. At a ratio of 1:1 or thereabouts, the business tax rate is negligible, and it gradually increases with the internal inequality of the firm. Shoot for a target of 8:1, perhaps.
It's a very rough suggestion. It'd have to be tweaked to prevent abuse by simply outsourcing to underfunded firms or contractors. But it does shift things a bit from a system of cobbled-together half-measures subject to rampant abuse, that clearly aren't adequate to the task. If we're going to decide that small business should be given some level of preferential treatment, then we should simply build it into the tax code directly.