Turning Payroll Into a Tax Strategy
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America’s tax code rewards all kinds of things: owning property, making investments, even parking your money offshore. But what if it rewarded something more fundamental—something that could reshape work and wages for millions of people?
Imagine this: the more people a company employs, and the better those employees are paid, the less that company pays in corporate taxes.
That’s it. Simple, direct, and fair.
The Core Idea
Pay Equity: Companies that narrow the gap between average worker pay and CEO pay earn lower tax rates. (For context: CEOs at S&P 500 firms make over 270 times what their average employee earns. In 1980, that ratio was about 30 to 1.)
Employment Growth: Companies that hire more full-time American workers (with benefits) also earn lower tax rates.
Annual Average Counts: Employee numbers are calculated on an annual average, so no company can game the system by hiring a bunch of workers on December 31.
No Loopholes: Contractors don’t count. Only full-time Americans, benefit-receiving employees are eligible.
This flips the incentive structure. Instead of rewarding stock buybacks, executive bonuses, or short-term profit grabs, companies now see tax relief when they strengthen their payrolls—the backbone of any healthy economy.
Why It Works
Paychecks Drive Growth: Wages aren’t just a line item—they’re fuel. Every extra $1 in wages for a low- or middle-income worker adds about $1.50 to $2.00 in economic activity because that money gets spent in the real economy.
CEO Pay vs. Worker Pay: At companies where executives make over 300x more than their workers, morale and retention plummet. A narrower gap keeps both people and profits healthier.
Encourages Hiring at Home: Imagine a system where a company adding 1,000 middle-class jobs could lower its tax rate by several percentage points. Suddenly, investing in people is as attractive as investing in machinery.
Possible Add-Ons
Employee Health Modifier: Healthier employees lower insurance costs for everyone. U.S. companies lose about $225 billion per year in productivity from illness-related absenteeism. Cutting that bill is a win-win.
Debt Reduction Modifier: U.S. workers hold about $1.7 trillion in student loan debt. Companies that help reduce it could unlock even more spending power.
Tariff Relief: For companies hitting equity and employment targets, tariffs on imported supplies could be lowered or removed—further reducing costs and boosting competitiveness.
These modifiers make the system holistic. It’s not just about more jobs—it’s about better jobs.
The Genius of It
This isn’t about punishing success; it’s about rewarding responsibility. Companies that truly share prosperity with their people get to keep more of their own profits. It reframes corporate taxes from a penalty for making money to a discount for making money the right way.
Instead of debates over minimum wage hikes, we could let the market respond to a smarter tax code. Want to pay your CEO 600x more than your average worker? Fine, but it’ll cost you. Want to expand your payroll and pay people fairly? You’ll see your tax bill shrink.
Closing Thought
For too long, we’ve designed our system around the myth that shareholder value is the only value. A payroll-based tax code says otherwise. It says: if you build a company that pays well, hires broadly, and treats people like assets instead of costs—you deserve a break.
It’s a win for workers, a win for responsible companies, and a win for the economy.