Tax credit for corporations that reinvest dividends on their own employees

This is a low level revision of an  automatic translation of the original page in Catalan. I apologize for any errors it may contain.

I just finisehd reading Darian L. Smith's book "Payback: Profitsharing and the coming age of working class prosperity" (1), and I would like to comment on his proposal and some of his ideas. In a nutshell, Smith proposes a surprisingly simple strategy:

A 60% tax credit for businesses that distribute profit-sharing dividends (a generous pre-determined percentage; up to 20-25% of net profits) directly to their employees on a monthly basis.

The book is short and easy to read, and quite "American". By this I mean that it contains some references to the great values that America has contributed to the world and remains within the traditional American value of reducing the role of government wherever possible. However, it can be endured. I've read in less than an hour of time.

Darian Smith lists and analyses up to 10 clear advantatges of his proposal:

1. It is already proven (although not at the scales proposed)
2. It Rewards Cooperation of All Participants
3. It is a Built-in Economic Stimulus
4. It Maximizes Employment
5. It Replenishes Government Revenues Without
6. Raising Taxes
7. It Decentralizes the Distribution of Wealth
8. It Corrects Old Imbalances
9. It Restores the Original Purpose of Government
10. It is Politically Neutral (neither right nor left)
11. It is a Model that is Globally Applicable

I do not have the space to discuss these benefits in depth, but I like the idea that receiving part of the profits can make attractive jobs that currently aren't: Where is the attraction in working 40 hours or more per week to earn less than 1,000 € a month when it is obvious that this quantity can not get us to the end of the month? However, if we add the some distribution of benefits to the wage, total revenues can become more attractive. I note that Smith believes that the distribution of benefits must be equal for all workers and should not include those that already own shares. I also like that the proposal can not be said to belong neither to Left or Right, probably because I find this division less and less relevant.

The proposal can clearly be tied to the principles of binary economics that we saw in a previous post and I think it could be coordinated without too many problems with other proposals such as Employee Stock Ownership Plans, but I would have liked Smith discussing this issue specifically.

In short, I find the possibility that workers participate in the profits of companies really interesting and I can hardly see what objection can be found on this proposal. The owners, especially those with a majority of the shares may lose some revenues, but according to the author this would be compensated by tax benefits. The government maight see a decrease in revenues, but according to the author this would be offset by the taxes on the new income of the workers and by the economic recovery that would be generated. In any case, if the majority owners must see their dividends diminished and the state its taxes reduced in return for the workers improving their economic situation, I for one feel comfortable enough about it to think about profitsharing seriously.

Referènces

1. Darian L. Smith "Payback: Profitsharing and the coming age of working class prosperity”, 2005.