A National
Profit-Sharing Incentive would quickly jump-start an economic
recovery.
By allowing
businesses a tax credit for plowing profits back to employees, all
of the components of a healthy economic recovery are
accomplished:
The National Bureau of Economic Research has
defined the 5 components of a healthy economic recovery. They are:
1. Increased personal income
2. Increased business sales
3. Increased industrial production
4. Increased employment
5. Increased Gross Domestic Product statistics for
2 or more consecutive months.
This incentive allows businesses a tax credit for
re-investing up to 20% of net profits back to their own employees.
(this would be in addition to the profit-sharing tax deductions
already allowed).
But we must not use current profit-sharing models. They are too
small, too late, and too weak.
A generous pre-determined percentage must be set around the 20%
range, and dividends must be in addition to regular wages. Research
also shows that frequent, non-deferred, cash-back distributions to
employees will create a rapid supply and demand cycle in the
economy. How?
 1.
Profit-sharing would rapidly raise household income,
creating increased supply and demand. It would help families pay for
mortgages, health care premiums, college, as well as products and
services from other businesses.
2. Increased supply & demand naturally
increases sales volume.
3. An increase in supply, demand, and sales
growth precedes new job creation. Better
paying jobs (linked to profits) incentivizes job seekers,
and rewards work. Profit-sharing on a national scale
would reduce unemployment, and transform poorly
paid jobs into partner-like positions that could support a family.
4. A well motivated workforce has been proven to
increase industrial productivity, if managed
properly and fairly.
5. A profit-sharing tax credit is a built-in,
permanent stimulus creating a healthy and sustained GDP.
The resultant increased economic activity would widen the
tax base and increase revenues. The increased federal revenues would
easily offset the cost of the tax credit in a relatively short
period of time. Higher incomes, more jobs, and more people working
would also lead to more paycheck with-holdings. This
replenishes the Medicare and Social Security coffers as well,
without increasing the tax. This incentive makes citizens, business
and government more self-sufficient, approximating a steady-state
economy.
This profit-sharing tax credit creates a leaner government, which is
more citizen and business responsive. It restores moral leadership
to a refined capitalism. Most
importantly, it is politically neutral. It is the
missing link of conservative supply-side economics and the missing
link of liberal economic democracy. Why not try it in one state
first, and as it demonstrates success, expand the program? Even
Ronald Reagan pronounced profit-sharing as a means of attaining
“increased capital ownership”. Please forward this site to your
state and federal representatives, as well as to business owners,
and concerned friends. Better yet, send them a hard copy of my book.
Your feedback is welcome. I reply to all comments.A trial run on the state, municipal, or
regional levels will prove its wider macroeconomic effects. It takes 2
clicks and your comments to FORWARD this to your colleagues.
Send it to your representatives in Washington as well. Send it to news
outlets and other Web sites with similar concerns. If you have any
further creative ideas on how to spread the word, please
e-mail Dr. Darian
L. Smith, your comments are welcome.
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