# Mandatory corporate profit sharing: Why would it not work (or work well anyway)? **URL:** \ **Category:** Great Debates\ **Created:** [April 3, 2019, 12:36pm UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974 "2019-04-03T12:36:00Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![Isamu](https://avatars.discourse-cdn.com/v4/letter/i/7c8e57/32.png) [@Isamu](https://boards.straightdope.com/u/Isamu)\ **Post date:** [April 4, 2019, 9:29am UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974/21 "2019-04-04T09:29:32Z")
There are companies out there that work that way. There are managers but there aren’t C-level people. There is a board but membership of the board rotates and no one is excluded. ---
**Author:** ![asahi](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/asahi/32/8693_2.png) [@asahi](https://boards.straightdope.com/u/asahi)\ **Post date:** [April 4, 2019, 10:29am UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974/22 "2019-04-04T10:29:36Z")
> [@elbows](#): > > I’ve long believed they should use the tax code to incentivize good profit sharing. To me it doesn’t seem that hard that someone could come up with an ‘ideal ratio’ for a few things. Like executive bonus vs salary increases for workers. The closer you are to the ideal ratio, the better your tax rate. Don’t care? It’s going to hit your tax bill hard. > > The same could be done with benefits, make executives/civil servants use the same plans exactly or face a tax penalty. Surely some one could come up with a working algorithm that rates number of over paid execs vs salaries of front line workers to determine who gets government tax breaks. > > It’s time to acknowledge the sad truth that the whole world (following the West’s example) is driven by money. Ethics are out the window in so many ways. Why not use money, in the form of tax incentives to shape the change people need. > > Why should Walmart make millions while their employees need to use a food bank to feed their kids? I think this post sums up my thinking, and in recent years, I’ve generally reached the same conclusion: we should use the tax code to discourage excessive profit taking and wealth hoarding. And you’re right: like it or not, no company in their right mind - especially a publicly-traded company - is going to do this on their own. They’re in the business of turning profits, not being good corporate citizens. If this change is to occur, it’ll have to be forced by public mandate. ---
**Author:** ![D\_Anconia](https://avatars.discourse-cdn.com/v4/letter/d/67e7ee/32.png) [@D\_Anconia](https://boards.straightdope.com/u/D_Anconia)\ **Post date:** [April 4, 2019, 1:48pm UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974/23 "2019-04-04T13:48:03Z")
How do you define “excessive profit taking”? ---
**Author:** ![Jas09](https://avatars.discourse-cdn.com/v4/letter/j/d07c76/32.png) [@Jas09](https://boards.straightdope.com/u/Jas09)\ **Post date:** [April 4, 2019, 2:05pm UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974/24 "2019-04-04T14:05:22Z")
How would this type of plan relate to the co-determination models popular in some European countries (Germany in particular I think). It seems to me that having a “worker’s council” with a seat on the board of directors answers some of the “skin in the game” questions without encouraging stock price or profit manipulation. Senator Warren has proposed similar structures for the US (among other things) - [Accountable Capitalism Act - Wikipedia](https://en.wikipedia.org/wiki/Accountable_Capitalism_Act) ---
**Author:** ![asahi](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/asahi/32/8693_2.png) [@asahi](https://boards.straightdope.com/u/asahi)\ **Post date:** [April 4, 2019, 2:24pm UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974/25 "2019-04-04T14:24:20Z")
> [@D\_Anconia](#): > > How do you define “excessive profit taking”? That’s a fair question to ask, and I’m not sure if I have a specific number in mind. Furthermore, I realize that the ‘problem’ in my mind isn’t merely a matter of post-tax profits, but pre-tax disparities in income between management and lower-level employees. Here, too, I think reforming the tax code so that it discourages excessive salaries would be the most obvious way to resolve this problem. ---
**Author:** ![elbows](https://avatars.discourse-cdn.com/v4/letter/e/b3f665/32.png) [@elbows](https://boards.straightdope.com/u/elbows)\ **Post date:** [April 4, 2019, 2:37pm UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974/26 "2019-04-04T14:37:26Z")
With an algorithm, don’t they determine everything else you willingly accept these days? Executive compensation vs lowest earner wages, if one gets an increase so should the other. If execs get giant bonuses and continuous wage increases, but lowest earners haven’t seen a raise or benefit increase over years they lose any corporate welfare/benefit/tax break they are enjoying. Tax rate increases one percent. If employees get no benefits, neither does the executive or board. This isn’t that hard I think. ---
**Author:** ![TriPolar](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/tripolar/32/3008_2.png) [@TriPolar](https://boards.straightdope.com/u/TriPolar)\ **Post date:** [April 4, 2019, 2:45pm UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974/27 "2019-04-04T14:45:48Z")
Sounds okay if done through tax incentives. The main problem is that companies don’t need to make a profit, they can simply concentrate on increasing the value of the company, so the incentive has to be pretty strong. The incentives should also be tied to maintaining and increasing employment and pay. Making this some kind of requirement will be counter-productive, companies will be averse to hiring, they’ll outsource instead. ---
**Author:** ![Velocity](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/velocity/32/18006_2.png) [@Velocity](https://boards.straightdope.com/u/Velocity)\ **Post date:** [April 4, 2019, 2:56pm UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974/28 "2019-04-04T14:56:51Z")
Seems that one downside would be that employers might simply cut a lot of people’s pay now. More profit sharing but less pay, possibly resulting in employees being no better off financially than they were before, and perhaps even worse off. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [April 4, 2019, 3:14pm UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974/29 "2019-04-04T15:14:39Z")
It’s not clear what problem this proposal is trying to solve. My CEO getting paid a lot does not harm me. If I want dividends, I can but stock. ---
**Author:** ![puddleglum](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/puddleglum/32/137_2.png) [@puddleglum](https://boards.straightdope.com/u/puddleglum)\ **Post date:** [April 4, 2019, 3:24pm UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974/30 "2019-04-04T15:24:49Z")
> [@elbows](#): > > With an algorithm, don’t they determine everything else you willingly accept these days? > > Executive compensation vs lowest earner wages, if one gets an increase so should the other. If execs get giant bonuses and continuous wage increases, but lowest earners haven’t seen a raise or benefit increase over years they lose any corporate welfare/benefit/tax break they are enjoying. Tax rate increases one percent. > > If employees get no benefits, neither does the executive or board. > > This isn’t that hard I think. Then the company just fires all the low level employees and hires a contracting firm to do their jobs. Employees and investors need different things from a company by making employees investors you fundamentally change the nature of work. This will not serve most employee’s needs. ---
**Author:** ![CarnalK](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/carnalk/32/486_2.png) [@CarnalK](https://boards.straightdope.com/u/CarnalK)\ **Post date:** [April 4, 2019, 3:30pm UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974/31 "2019-04-04T15:30:16Z")
> [@Quartz](#): > > Because all to often ‘independent’ trusts aren’t actually independent. Those of us in the UK will remember Maxwell’s misuse of the Mirror’s pension funds. What I’m suggesting is nothing like a pension fund. It would hold a single company’s stock and distribute dividends. That’s it. ---
**Author:** ![Bone](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bone/32/407_2.png) [@Bone](https://boards.straightdope.com/u/Bone)\ **Post date:** [April 4, 2019, 3:35pm UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974/32 "2019-04-04T15:35:31Z")
I think it’d be trivially easy to avoid paying. It’d be like a tax on small businesses who can’t afford to make structural strategic moves, and a tax on stupid businesses. ---
**Author:** ![asahi](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/asahi/32/8693_2.png) [@asahi](https://boards.straightdope.com/u/asahi)\ **Post date:** [April 4, 2019, 3:57pm UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974/33 "2019-04-04T15:57:53Z")
> [@Bone](#): > > I think it’d be trivially easy to avoid paying. It’d be like a tax on small businesses who can’t afford to make structural strategic moves, and a tax on stupid businesses. There are ways to make structural and strategic moves more challenging, and if it comes down to offshoring, then there are ways to tax that as well. Not that we’re anywhere even remotely close, politically, to achieving this kind of eureka moment – it’ll probably require a collapse of the financial system first. But if we can fundamentally change our ideas about the “freedom” that private wealth holders should possess, then we might see a paradigm shift. ---
**Author:** ![Bone](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bone/32/407_2.png) [@Bone](https://boards.straightdope.com/u/Bone)\ **Post date:** [April 4, 2019, 4:32pm UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974/34 "2019-04-04T16:32:26Z")
> [@asahi](#): > > There are ways to make structural and strategic moves more challenging, and if it comes down to offshoring, then there are ways to tax that as well. Sure, if there is magical handwaving, then anything is possible. Or if there is a complete upheaval of everything that is currently known, then sure a phoenix can rise from the ashes and be reborn perfectly efficient. But in the current environment, a proposal like this could be simply defeated with increased dividends. There’s a host of other tactics as well depending on the particulars. ---
**Author:** ![CarnalK](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/carnalk/32/486_2.png) [@CarnalK](https://boards.straightdope.com/u/CarnalK)\ **Post date:** [April 4, 2019, 4:38pm UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974/35 "2019-04-04T16:38:16Z")
> [@Bone](#): > > I think it’d be trivially easy to avoid paying. It’d be like a tax on small businesses who can’t afford to make structural strategic moves, and a tax on stupid businesses. So this completely undetailed scheme would be trivially easy to avoid? I can’t help but feel that is a political reflex opinion rather than a thoughtful one. ---
**Author:** ![elbows](https://avatars.discourse-cdn.com/v4/letter/e/b3f665/32.png) [@elbows](https://boards.straightdope.com/u/elbows)\ **Post date:** [April 4, 2019, 4:57pm UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974/36 "2019-04-04T16:57:09Z")
‘But someone could find a way to cheat!’ Doesn’t seem a sound argument to me. When and if that occurs, what happens is what has always happened, regulations are altered to restrict those actions. It happens all the time with newer legislation and is actually how many laws on the books currently, were shaped. This is neither new, nor a sound argument against new regulation. Radar detectors were a way to cheat speeding enforcement, yet somehow the regulators managed to handle it. ---
**Author:** ![Bone](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bone/32/407_2.png) [@Bone](https://boards.straightdope.com/u/Bone)\ **Post date:** [April 4, 2019, 5:01pm UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974/37 "2019-04-04T17:01:02Z")
> [@elbows](#): > > ‘But someone could find a way to cheat!’ Doesn’t seem a sound argument to me. > > When and if that occurs, what happens is what has always happened, regulations are altered to restrict those actions. It happens all the time with newer legislation and is actually how many laws on the books currently, were shaped. > > This is neither new, nor a sound argument against new regulation. > > Radar detectors were a way to cheat speeding enforcement, yet somehow the regulators managed to handle it. It’s not a ‘but someone could cheat’ argument. It’s a ‘it won’t be effective at all’ argument. In any event, I wouldn’t consider it cheating in any way either. If I pay you via channel X or channel Y and one is cheaper than the other, I’m going to choose the cheaper one. I’d say enacting this type of law is possible, but it wouldn’t be very effective. Better to develop the goal trying to be accomplished, then come up with the best ways to do that, rather than the other way around. ---
**Author:** ![bump](https://avatars.discourse-cdn.com/v4/letter/b/7c8e57/32.png) [@bump](https://boards.straightdope.com/u/bump)\ **Post date:** [April 4, 2019, 5:08pm UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974/38 "2019-04-04T17:08:10Z")
I think the argument isn’t so much that it’s easy to cheat, but that it’s easy to cheat, **and** incredibly difficult to detect and enforce. I mean, let’s say for the sake of argument, that a company is hateful toward its employees and is adamantly against sharing profit for some reason. They could very easily just plow any excess money right back into the business and use it as R&D, capitol improvements, etc… and never pay their employees a dime of profit, because all that stuff would lump under the Expense part of the income statement, and never actually be realized as profit. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [April 4, 2019, 5:09pm UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974/39 "2019-04-04T17:09:06Z")
> [@Bone](#): > > Better to develop the goal trying to be accomplished Yes, please. ---
**Author:** ![Telemark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/telemark/32/372_2.png) [@Telemark](https://boards.straightdope.com/u/Telemark)\ **Post date:** [April 4, 2019, 5:09pm UTC](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974/40 "2019-04-04T17:09:47Z")
> [@elbows](#): > > ‘But someone could find a way to cheat!’ Doesn’t seem a sound argument to me. “But companies have gamed every system so far that mandates large benefits to employees” is a pretty good one. Massive changes like this, especially ones that attempt to fundamentally change the relationship of employee to employer, are fraught with unintended consequences. In this case in particular, the discussion would benefit from a clear problem statement that lays out what we are attempting to solve. It’s not terribly bad idea on its face, but the devil’s in the details. IMO, mandating specific payments or schemes seems like the wrong way to approach the problem. It’s better to set metrics and allow companies to figure out how best to craft a solution. [Previous page](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974.md?page=1) [Next page](https://boards.straightdope.com/t/mandatory-corporate-profit-sharing-why-would-it-not-work-or-work-well-anyway/831974.md?page=3)