Guiding Companies Through their Pocket Books - Sylvain Rochon

As far as motivating businesses to do the right thing for our society, the government ministries should strive to create programs that motivate the creation of companies that will produce desirable social results.   Companies will logically move in directions that will help them achieve their goals.  If company structures are all created to encourage the active company participants, from founders to workers, to accomplish the reason why they created the company in the first place, companies would therefore be easy to guide towards common good.

So, if a government wishes free willed shareholders to take decisions that will benefit their nation’s population, they can use conditional tax credits or funding programs that engages company owners and executives towards specific behaviors.  Setting the conditions for the additional financial help ensures companies that want to benefit from the help and compete better than others are driven towards what a nation needs.  Instead of tax credits it could be lower taxes and another financial schema.  What matters are the conditions.

Let me give you an example from my own experience.  I used to own software development companies.  I could hire local expertise or outsource to Eastern Europe or South-East Asia.  Local programmers and artists were more expensive than if I outsourced outside of the country.  However, in Ontario, Canada, there was a 35% tax credit for digital media productions, which is what we were doing as a service for other.  The tax credit covered all expenses of the project, even marketing if we needed it.  The tax credit existed because the provincial government wanted to keep digital media jobs within the province and grow that specific industry. Therefore, in most cases, we hired contractors in Ontario to do the work since outsourcing to eastern Europe, though a cheaper proposition on the face of it, after the tax credit, it really didn’t make a difference.  Thus, though the government had to pay for this behavior, it grew the province’s and the nation’s capacity in digital media as well as keeping the jobs within the boundaries of the nation.  Nowadays, cities like Toronto, Ottawa and even Guelph are well known centers where many Hollywood movies and TV shows are filmed, and where many media companies have offices employing many.  Then college and universities have created programs in those areas in reaction to the demand and so on.  The province may have paid out lots of tax credits to companies, but on the other hand they gained more revenues in taxes through the process growing a modern industry and capturing many people’s imagination to the prospect of working in those areas of expertise.

This is an intelligent program with predictable results based in simple mathematics.  If, in our ideal society, we have the best leaders and our ministries, they will inevitably create such programs to drive business motivations in the right way.  Keep free trade, entrepreneurship and competition going in the private sector, but guide it for common good through the oversight of our top national experts that see things in broader terms:  the well-being of our citizenry.

Taxation

Government ministries should take as few resources as possible and use plenty of automation to get the job done and let the private sector build.  The government is there to direct for the common and try to avoid being a drain on resources.

We need the best leaders in our ministries and be very lean.  The government needs to be agile, lightweight and with a clear purpose.  The population itself, as individuals, creative commons, collectives, or companies should be competing with teach other according to principles of offer and demand. 

Still, for the government to ensure basic needs are met, through an unconditional basic income (UBI) and other means, it needs to draw money from somewhere. 

Tax on revenues I believe is still a good way to go in all cases as a primary way to derive revenues for a nation.  The exact schema I recommend is described further in this book but basically, the more you make exchanging goods or services for money, the higher your tax rate should be.  It’s only fair.  Since you already have your basic needs met through unconditional basic income, an increasingly large part of what you make as extra can be contributed to support yours and other’s basic needs.  The exact recommended math on how to do this is in the Economy Section.

It is not as easy as it sounds since if taxes and tax credits are not balanced well enough, this sort of model could discourage innovation in a nation and encourage entrepreneurs to move to other nations that can provide better programs and benefits.  The balancing act is important, once again necessitating the best people to be placed in the ministries to take the best decision possible for us all.