Tuesday, August 4, 2020

Steps to decrease income inequality

US government can make mandatory for large corporations beyond certain value to distribute a certain part of its shares to general public through equity or mutual funds (dedicated only to these large corporations, taking mutual funds route is highly recommended), restricting the sale to middle class and low economic class in equity or mutual funds. Companies, when reach the designated threshold should redistribute their shares to general public, may even give a preference to low income households, among those who apply for their shares initially and thereafter restrict sales to middle and low economic class. This will distribute wealth to the middle class and to a certain amount to low income households. The institutional investors can invest in startups and SMEs till it reaches the threshold and sell their shares thereafter. These investors will now invest in new ventures and companies which need investment, inturn rekindling economic activity, further generating growth in the US economy. Share prices may increase less to some extent, compared to earlier model, since we are restricting the sale of shares to people of middle and low income class, but organic growth will not be affected, which will bring profits to the middle class and the poor. All tricks like tax evading, showing losses like amazon does, anything big companies fathom does, will not affect the middle and poor class. It can only increase their wealth. This policy inturn will help solve the huge salary inequalities between top paid workers like CEOs to down the ladder workers. From the 1% to the 99%, without affecting the economy and the core principles of capitalism.

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