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By Tom Burgess, Inequality.org
August 21, 2018

‘Social Offsetting’ Could Help Us Turn Around An Economic System Where Wealth Gets Created By The Many, Accumulated By Just A Precious Few.

How We Can Make The Economy Work For All Stakeholders | PopularResistance.Org

Bermuda is a lovely place to have a home. Pink sand beaches. Pleasant temperatures. A distinctive blend of British and American culture. Bermuda — all 22 square miles of it — also happens to be home to over 18,000 companies that trade and generate wealth in other jurisdictions but take advantage of the secrecy and low tax rates that Bermuda so generously offers.

Economist Gabriel Zucman, author of The Hidden Wealth of Nations, and his research colleagues tell us that multinational corporations based in the United States and other advanced economies have sheltered nearly 40 percent of their profits in tax havens like Bermuda, in the process depriving their domestic governments of badly needly tax revenues and enriching already wealthy corporate shareholders.

Those shareholders are getting plenty of enriching outside Bermuda as well. The Tax Cuts and Jobs Act that President Trump signed into law last December is handing America’s top executives billions upon billions in corporate tax savings.

These execs aren’t devoting their new billions to job creation and wage growth, the ostensible rationale for the GOP tax cut. They’re having their firms buy back their own shares off the open market, a move with one purpose and one purpose alone: goosing up corporate share prices — and, not so incidentally, the mega millions in corporate executive pay linked to these share prices.

All this self-enrichment comes, of course, at the expense of the majority of ordinary working people. They’ve seen wages fall and prices rise.
Our contemporary wealth gap reflects our deeply flawed, out-of-date economic system. We are failing to meet the needs of a multi-stakeholder society. We’re serving instead only shareholders. So how do we get companies and the executives who manage them to act responsibly in the interests of all stakeholders and not just these shareholders?


A Sweet New Century!

How about we rethink tax incentives? Everyone, after all, likes to save on taxes. An approach called “social offsetting” could give us the incentives we need for a more just and productive world.

At the heart of this approach: carrots, not sticks!

Let’s reward companies that respect the needs of all a corporation’s stakeholders. Let’s give tax breaks to companies that behave responsibly — that pay a real living wage to workers and don’t pay their top execs more than 20 times their lowest-paid worker, that have a profit-sharing program in place, that make no political contributions, that offer employees adequate training and flexible hours, that use renewable energy, that do not shift profits overseas to avoid taxes.
Social offsetting in this manner could make a major contribution to reducing inequality and moving us forward and closer toward prosperity for all.

Social offsetting would use financial incentives to encourage socially responsible business behavior. Those companies that take these incentives would quickly be seen as good employers and have an easier time attracting the best employees. They would be off and running to success and sustainability.

A corporate income tax structured to recognize good corporate behavior would be a fair tax. We all have a hand in creating the wealth our economy generates. That wealth just needs to be shared more equitably. And corporate income taxes — taxes on profits — don’t increase the cost of doing business or distort the economy. They only kick in below the bottom line, after expenses and revenues have been calculated and tallied.

With social offsetting, a corporate income tax return would become a badge of honor for responsible corporations and a source of shame for corporations that concentrate wealth at our economic summit. With socially offsetting, we could see more companies making a positive contribution to all of society, not just for the privileged few.

With social offsetting, wealth would start coming home where it was created, which is not in Bermuda!

A Comment

mwildfire4 hours ago
I'm sorry, but I think this is utter nonsense. First of all, implementing what is suggested would require an act of Congress--literally speaking, meaning you need to get the current money-soaked Congress, virtually all of whom owe their seats to various corporate sponsors who expect certain favors in return for the cash, to pass a law that harms their benefactors in the only way corporate "persons" can understand, threatening their profit levels. When do you think THAT is likely to happen? Secondly, even if the law exactly as the author envisions it were passed-

presumably on the same day pigs zoom overhead with their pretty new pink wings--is there any chance that corporations would manage to game the system so that all the biggest and most destructive were certified as angelic entities deserving of massive tax breaks? No, there isn't a chance of that--there's a certainty of that. Look what's happened with essentially every regulatory agency--they get captured, and are soon working to protect the corporations from outraged citizens, largely by putting up a pretense of regulation and tying up citizens in the endless red tape of trying to get justice. The author suffers from a failure of imagination. We don't HAVE TO have corporations. We don't need kinder gentler wars or softer less intrusive rape, the equivalent of beneficent corporations. We can just outlaw them entirely, the only way we'll ever be able to stop their harm. Most people don't know that a couple of hundred years ago, this country did have all kinds of laws limiting corporations--they could only exist if chartered by a state legislature, for a set period of years, to do a set thing and nothing else, were not allowed to get involved in politics, or to own other corporations, and could be disbanded early by the states if they were displeased. But corporate power gradually tossed these restrictions, rearranging the bridle so the bit was in the mouth of the public and the reins in the hands of corporations. Even realistic laws to rein them in would no doubt end the same way--too much money in one place equates to power. We need to ban economic entities beyond a certain size.
Wishful thinking... How do you create overnight a well-educated, civicly passionate and alert, environmentally gentle and protective citizenry with a love, and sense, of justice to recognize the benefit of such ideal corporations and fend off the attacks of today's corporations? To even create co-operative enterprises is, as we know, quite a struggle.

Don't underestimate the greed gene(s) whose location(s) is(are) still a puzzle. Besides Capitalism would never allow a human GMO version if only for the purpose of Saving Greed and Competition to experience the pleasures of social distinction and superiority.

It is a deeply embedded liberal conceit that the State is a neutral actor, with some inclination to promote social justice. It is a capitalist state with clearly defined goals. Liberal capitalist "democracy" is the illusion that must be dispelled.