Employee Income Inequality Tax

Here’s a way to force corporations to take society into account while they rake in their billions for CEOs, board members and shareholders.

• Employee Income Inequality Tax
• Income Inequality Maximum Dividend

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 (bad for society) the maximum dividend allowable decreases (bad for shareholders).

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.

EXAMPLE: Employee Income Inequality Tax (EIIT):
If the CEO makes $5M and the lowest paid employee makes $100k then 100,000 : 5,000,000 = 1:50 = .50%. This corporation owes .50% of their gross profits.

EXAMPLE: Income Inequality Dividend Maximum (IIDM):
The same ratio 1:50 would limit such a corporation’s yearly dividend to 3.71% of gross profit. (This is a custom equation expressed in the spreadsheet.)

https://goo.gl/74bFhK (A google drive spread sheet)

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% unlimited
$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%

10 thoughts on “Employee Income Inequality Tax

  1. I wish I was good enough in Math to analyze your spread sheets.

    But I suspect your ideas are feasible.

    Seeing as how your nickname Mole is the same name as a character Mole in Kenneth Grahame’s book The Wind In The Willows that I love so well.

    Liked by 1 person

  2. Another gem; and another lover of spreadsheets! Tackling income inequality should be our biggest priority. So many evils of society stem from the haves having and the have nots knotting. I don’t know what that means, but I got in a hurry.

    I had an argument on Facebook yesterday with a gal, and I said this when she berated me for promoting taxation:

    “Here’s the thing: you’re already being taxed. But instead of your money going to help society prosper it is instead going to help prosperous people prosper all the more. You pay more to help rich people right now than poor people. Even more than what you pay to help rich people you pay to fund the military-industrial complex and foreign wars (which also helps rich people). Your hard earnings are already being appropriated; you are paying more than your fair share. Who isn’t? You guessed it, the ultra-rich. The beauty of progressive taxation is that everyone pays a proportionate share. The beauty of social programs is that we all benefit, at every level, the rich and poor alike. And it works, everywhere but here. Why? Because of the belief they have sold you that you are working hard so that other people don’t have to. It’s a shell game, sister, and you ought to start seeing it for what it is.”

    She “liked” it and moved on without another word, which probably meant she hated it and was fed up with me. But, dammit, come to my wall and challenge me and I will challenge you back!

    Nicely. 🙂

    Have a great day, friend!

    Liked by 1 person

  3. 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.


    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.

    Liked by 1 person

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