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What
company doesn't dream of doubling its profitability?
This
is what the ESOP employee share ownership plan can achieve
in most European countries, depending on the corporate
income and dividend tax rates.
It is well known that each type of business ownership
has its own particular forms of fiscal engineering.
Whether it's the large international group, the individual
boss or the family ownership, they all have their own
methods.
On the other hand, it is generally overlooked that employee
ownership provides particularly effective mechanisms
for SMEs.
As
a result, the existing tax system may encourage employee
share ownership and the reduction of wealth inequalities.
And this without any particular new legislation.
This
particularity is at the root of the success of ESOP
employee share ownership plans.
Indeed, the ESOP plan makes it possible to clear out
the company's profits in the form of supplementary pension
contributions for the employee-owners of the company.
Once the profit has been disposed of, there is no longer
any tax on the profit or on the dividends. It's as simple
as that.
This
is what makes the ESOP plan simpler and more effective
than any other for employee ownership in SMEs and for
providing them with equity capital.
This
has been one of the two keys to the success of ESOP
plans in SMEs in the US since 1974.
That
is why there are 14 million employee shareholders in
ESOP plans in the USA, compared with barely one million
employee shareholders in SMEs in Europe, even though
the US population is half as small as ours.
Fiscal
engineering is often decried. In many cases, it reduces
taxes to benefit private interests at the expense of
the public interest.
With
the fiscal engineering of employee share ownership,
it's a different matter altogether. This benefits all
employees and the public interest. Indeed, all studies
show that it contributes to general well-being and the
reduction of inequalities.
The fiscal engineering of employee share ownership is
a virtuous fiscal engineering.
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