One Small Cut on Corporate Welfare

Corporations have said they need lower taxes to be competitive globally. Let’s give it to them, and possibly even a flat tax, in return for a reduction in corporate welfare. Corporate welfare comes in many forms, but one definition might be “corporate welfare is any financial advantage that benefits executives and/or investors without benefiting the workers or the nation as a whole”. I’m not a tax attorney but here’s one small cut to get the ball rolling. Executive bonuses benefit only the recipients, and some have gotten to be outrageous, so revise the deductibility of such bonuses as follows:

The only portion of an executive bonus that can be deducted is an amount equal to the average bonuses received by the workers of the company.

As a simple example, suppose three executives got $10,000 bonuses and the employees each received a $500 bonus. Only $500 of each of the three executive bonuses would be deductible as a payroll expense. The rest would come off the bottom line.

A small step like this won’t reform taxation or reduce the income inequality that was exacerbated by a stimulus program that favored the wealthy but it would signal the population that these issues will be addressed.


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