Employee Income Inequality Tax

Here’s a way to level the playing field: 

• Employee Income Inequality Tax
• Income Inequality Maximum Dividend

https://goo.gl/74bFhK

Essentially, corporations must pay a tax based on employee income equality. The greater the inequality, the greater the tax.

Additionally, corporation dividends are limited to the inverse of their employee’s income inequality. As inequality increases the maximum dividend allowable decreases.

Simple rules that will incentivize corporations to ensure that their pay scales are as level as possible.

For a company that pays everyone equally, there is no tax and no limit to the dividend. (The spreadsheet shows a fractional tax and a 10% dividend but this is just an example calculation).

For a company that exhibits the worst disparity, a 500 to 1 ratio, the tax would be 5% of gross income and a maximum of 0.0% dividend. Corporate boards will be sure to make sure they reduce disparity for such companies as they will be penalized for such ugly inequality.

I probably have some of these numbers goofy or are inappropriate. BUT the bottom line is, create simple rules that anyone can understand that will apply as incentives for corporations to do the right thing.

“Corporations respond only to the whip.” — Anonymole

Employee Income Inequality Tax (EIIT)
Income Inequality Dividend Maximum (IIDM)
MaxIncome MinIncome Ratio Tax Penalty Max Dividend
$200,000.00 $200,000.00 1 0.01% 10.00%
$200,000.00 $100,000.00 2 0.02% 8.88%
$200,000.00 $80,000.00 3 0.03% 8.53%
$200,000.00 $60,000.00 3 0.03% 8.06%
$200,000.00 $40,000.00 5 0.05% 7.41%
$1,000,000.00 $200,000.00 5 0.05% 7.41%
$1,000,000.00 $100,000.00 10 0.10% 6.29%
$1,000,000.00 $80,000.00 13 0.13% 5.94%
$1,000,000.00 $60,000.00 17 0.17% 5.47%
$1,000,000.00 $40,000.00 25 0.25% 4.82%
$5,000,000.00 $200,000.00 25 0.25% 4.82%
$5,000,000.00 $100,000.00 50 0.50% 3.71%
$5,000,000.00 $80,000.00 63 0.63% 3.35%
$5,000,000.00 $60,000.00 83 0.83% 2.88%
$5,000,000.00 $40,000.00 125 1.25% 2.23%
$20,000,000.00 $200,000.00 100 1.00% 2.59%
$20,000,000.00 $100,000.00 200 2.00% 1.47%
$20,000,000.00 $80,000.00 250 2.50% 1.12%
$20,000,000.00 $60,000.00 333 3.33% 0.65%
$20,000,000.00 $40,000.00 500 5.00% 0.00%
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3 responses to “Employee Income Inequality Tax

  • Anony Mole

    THE HIGH-FREQUENCY TRADING ARMS RACE: FREQUENT
    BATCH AUCTIONS AS A MARKET DESIGN RESPONSE*

    http://faculty.chicagobooth.edu/eric.budish/research/HFT-FrequentBatchAuctions.pdf

  • Anony Mole

    Public corporations should be judged by stricter rules than those for private entities. It’s not the short term gains, nor the kowtows to the bottom line the board bows to. No, it’s the imbalance of equity the components of the corporation acquire during the operation of said corporation. That is, how inequitable is the pay the company doles out — from the puffed up CEO to the hard working janitor? That ratio is the measure by which corporations should be judged.

    https://anonymole.wordpress.com/2016/01/16/employee-income-inequality-tax/

    That link outlines a simple tax scheme showing just how corporations should be gauged – income equality wise. It’s a simple thing. The more inequitable the pay ratio the more tax a corporation must pay. The more unbalanced the pay is between the top and the bottom of the worker pyramid the less dividends allowed for distribution.

    It really is simple. Create rules that train corporations to do the right thing.

    If corporations are doing the wrong thing, then the rules lack and need to be redesigned.

    ~~~

    What such an exchange should be constructed as is a Dutch Auction, that executes its matching engine just once a day, at noon EST.

    I’ve given such concepts long and deep thought. What it all boils down to is this: at what time scale should humans exchange value for value?

    We are talking about trading shares in companies that are, at least stated to be, long term investments. So, why should shares in said companies trade on the microsecond on the NYSE or NASDAQ or IEX?

    Instead, shares, perhaps even dedicated shares from existing companies, should be traded at a set time every day — and that’s it. At noon in New York, a Dutch Auction is held whereby those willing to sell their shares are matched up with those willing to buy new shares at an arrived upon price based on outstanding bids and offers. It’s the same thing that happens every morning on the NYSE. But in this case it’s what is the one and only time you can trade these shares.

    But more to the point, it’s the human speed at which these shares are exchanged. INVESTORS would never care to trade in the blink of an eye. INVESTORS would care to trade at noon at the arrived upon price. And that’s it. No face sucking vampire squids eating away at your transactions through HFT slippage and the like. Stock trading should always be done at humans speeds. At exchanges which value intentional trades of human valued securities.

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