Based on objective standards (discussed shortly), the CAS would establish and assign social benefit classes for corporations nationwide, based on Class A through Class E. Each designation would come with a class-specific tax structure for profits and capital gains (the taxes investors pay when selling stock at a profit), as well as a few other measures:
Corporate Income Tax Rate
Capital Gains Tax Rate
|Class A Corporation
||0-10% on a progressive scale based on income. Maximum tax rate is 10%.
||Short term: 10%. Long term: 0%. After $2M, gains are taxed as income.
|Class B Corporation
||0-20% on a progressive scale based on income. Maximum tax rate is 20%.
||Short term: 20%. Long term: 10%. After $2M, gains are taxed as income.
|Class C Corporation
||10-30% on a progressive scale based on income. Maximum tax rate is 30%.
||Short term: 25%. Long term: 15%. After $2M, gains are taxed as income.
|Class D Corporation
||10-45% on a progressive scale based on income. Maximum tax rate is 45%.
||Short term: 30%. Long term: 20%. After $2M, gains are taxed as income.
|Class E Corporation
||10-55% on a progressive scale based on income. Maximum tax rate is 55%.
||Short term: 35%. Long term: 25%. After $1M, gains are taxed as income.
The purpose of these classifications is to establish the overall social impact of a corporate entity in objective terms. By "objective," we mean that the standards are clearly defined and not up for interpretation (either it's met or not), which works to avoid the suspicion of political meddling or favoritism.
Generally speaking, the criteria the Alliance Party would seek to establish corporate classification on is as follows:
Ratio of Executive to Average Worker Pay: The United States has among the highest ratio of executive to average worker pay in the world, which has led to growing income inequality and outsized influence over our economy by the financial elite. We don't believe it's right to mandate a lower executive to average worker pay by law. But if you have a pay ratio reflecting the public interest, we believe you and your investors should have a more attractive tax structure.
Social focus and environmental impact: Does a company's business model surround next-generation energy technologies, making replacement limbs or other life-saving equipment? Or does its business model depend on selling payday loans and intoxicants? Does the company take strides to have negligible environmental impact? Or does it contribute to widespread pollution?
The Alliance Party holds that the tax rate a company pays should be proportionate to its social impact. If it makes society better and stronger, the company and its investors should pay less to do business. If they make money by harming society, the company and its investors should pay more to do business.
It's important to state for clarity that as a constitutional right, the firearms industry would not automatically face a less desirable corporate classification in this model, remaining eligible provided they meet the requirements. Also, any industries dealing with intoxicants would only be restricted from Class A or B status after they have reached a large size. Artisan and craft manufacturers would be receive full eligibility for all classifications.
Employee benefits: objective standards for how well a company treats its workers, outside of the ratio of executive to average worker pay. This involves how much paid vacation time, maternity leave, on-site amenities, etc., companies issue to their employees. If a company grants their employees higher quality benefits, they should pay less taxes. The opposite is true with companies who treat their workers worse.
These classes help designate an effective answer to the fundamental question of corporate ethics and operating behavior, and they help to allow outside influences: investors, boards and customers to pressure companies to adhere to higher standards. By design, this pressure is difficult to ignore.
What corporate board or primary investor is going to want their company to pay higher tax rates so their CEO can make $50 million a year while their subordinates make a meager living, whereas instead the CEO can only make $10 million a year and their employees get paid competitively with great benefits?
What private investor is going to want to buy stock in a company that will subject them to a higher capital gains tax once the stock is sold, especially since the company itself will have to pay higher taxes for its decisions to care less about corporate ethics and social responsibility?
Not many on either front.
It’s the fundamental carrot and stick approach. If a corporation actively seeks to be socially beneficial, it can expect highly favorable operating conditions and even receive rewards for doing so. If a corporation is cavalier toward its social impact, it can expect less favorable operating conditions, higher operating costs and taxes, alongside less attracted investors and pools of employees. The choice is up to the company, and as a people, we win either way.