The Corporate Affairs Service is a new approach to American business

American business is the backbone of our economy. It employs the majority of Americans and provides the products and services that make our advanced society possible. But after high-profile oil spills and environmental disasters, fraud scandals and inappropriate financial influence of government, its relationship with society has strained. Because of this, government has attempted to enact regulations on corporate business that, while well-intentioned and necessary in theory, have become too ham-handed in practice. Alongside corporate tax rates which rank among the highest in the developed world, this makes it more expensive to do business in America than it should be.

The Alliance Party believes that efficient regulation, low corporate taxes and high corporate standards are not mutually exclusive. We can ensure that businesses can flourish without undue restrictions from government while ensuring waterways don't get poisoned, our air is breathable and our workforce isn't taken advantage of. Labor and businesses do not have to be enemies of each other, and through the improvements we seek to enact elsewhere in our society, we seek to build a framework that puts both on the same side towards the same goal: a stronger economy, a more prosperous society and a more powerful workforce.

This framework starts with the Corporate Affairs Service (CAS), a new public entity we intend to create as part of our Government 2.0 model for public service. It's primary function is to coordinate outreach with companies and set transparent standards of operation that incentivize businesses towards lower taxes for both their company and investors. At the same time, like the Government Accountability Agency, the CAS is designed to investigate corporate wrongdoing and hold both the corporation and its executives accountable for unlawful actions while promoting ethical companies who follow the rules.

The CAS works through three primary functions:

Assigning Social Benefit Classes

Assigning Social Benefit Classes

Based on objective standards (discussed shortly), the CAS would establish and assign social benefit classes for corporations nationwide, based on Class A through Class E. Each designation would come with a class-specific tax structure for profits and capital gains (the taxes investors pay when selling stock at a profit), as well as a few other measures:

Corporate Classification

Corporate Income Tax Rate

Capital Gains Tax Rate

Class A Corporation 0-10% on a progressive scale based on income. Maximum tax rate is 10%. Short term: 10%. Long term: 0%. After $2M, gains are taxed as income.
Class B Corporation 0-20% on a progressive scale based on income. Maximum tax rate is 20%. Short term: 20%. Long term: 10%. After $2M, gains are taxed as income.
Class C Corporation 10-30% on a progressive scale based on income. Maximum tax rate is 30%. Short term: 25%. Long term: 15%. After $2M, gains are taxed as income.
Class D Corporation 10-45% on a progressive scale based on income. Maximum tax rate is 45%. Short term: 30%. Long term: 20%. After $2M, gains are taxed as income.
Class E Corporation 10-55% on a progressive scale based on income. Maximum tax rate is 55%. Short term: 35%. Long term: 25%. After $1M, gains are taxed as income.

The purpose of these classifications is to establish the overall social impact of a corporate entity in objective terms. By "objective," we mean that the standards are clearly defined and not up for interpretation (either it's met or not), which works to avoid the suspicion of political meddling or favoritism.

Generally speaking, the criteria the Alliance Party would seek to establish corporate classification on is as follows:

Ratio of Executive to Average Worker Pay: The United States has among the highest ratio of executive to average worker pay in the world, which has led to growing income inequality and outsized influence over our economy by the financial elite. We don't believe it's right to mandate a lower executive to average worker pay by law. But if you have a pay ratio reflecting the public interest, we believe you and your investors should have a more attractive tax structure.

Social focus and environmental impact: Does a company's business model surround next-generation energy technologies, making replacement limbs or other life-saving equipment? Or does its business model depend on selling payday loans and intoxicants? Does the company take strides to have negligible environmental impact? Or does it contribute to widespread pollution?

The Alliance Party holds that the tax rate a company pays should be proportionate to its social impact. If it makes society better and stronger, the company and its investors should pay less to do business. If they make money by harming society, the company and its investors should pay more to do business.

It's important to state for clarity that as a constitutional right, the firearms industry would not automatically face a less desirable corporate classification in this model, remaining eligible provided they meet the requirements. Also, any industries dealing with intoxicants would only be restricted from Class A or B status after they have reached a large size. Artisan and craft manufacturers would be receive full eligibility for all classifications.

Employee benefits: objective standards for how well a company treats its workers, outside of the ratio of executive to average worker pay. This involves how much paid vacation time, maternity leave, on-site amenities, etc., companies issue to their employees. If a company grants their employees higher quality benefits, they should pay less taxes. The opposite is true with companies who treat their workers worse.

These classes help designate an effective answer to the fundamental question of corporate ethics and operating behavior, and they help to allow outside influences: investors, boards and customers to pressure companies to adhere to higher standards. By design, this pressure is difficult to ignore.

What corporate board or primary investor is going to want their company to pay higher tax rates so their CEO can make $50 million a year while their subordinates make a meager living, whereas instead the CEO can only make $10 million a year and their employees get paid competitively with great benefits?

What private investor is going to want to buy stock in a company that will subject them to a higher capital gains tax once the stock is sold, especially since the company itself will have to pay higher taxes for its decisions to care less about corporate ethics and social responsibility?

Not many on either front.

It’s the fundamental carrot and stick approach. If a corporation actively seeks to be socially beneficial, it can expect highly favorable operating conditions and even receive rewards for doing so. If a corporation is cavalier toward its social impact, it can expect less favorable operating conditions, higher operating costs and taxes, alongside less attracted investors and pools of employees. The choice is up to the company, and as a people, we win either way.

Issuance and Control of Corporate Licenses

Issuance and Control of Corporate Licenses

Today, one needs a license to practice law or medicine, sell liquor, even cut hair or paint nails. But we don't require any sort of license or ethical standard to serve as a corporate executive, even though corporations have outsized impact to our society. If in any licensed profession a person acts improperly, their license can be suspended or revoked as a consequence. The same should be true with corporate business.

In our model the Corporate Affairs Service would issue and keep track of two distinct sets of licenses for corporate entities, one for the company leadership, and the other for the company itself. These licenses are respectively referred to as a Corporate Executive License and a Corporate Operation License, described as follows:

The Corporate Executive License is a license that would be required for any person to be employed as a corporate executive of a company that earns more than $5 million annually (applicable only to subchapter S and C corporations). This license would be additionally required for anyone sitting on a corporate board of a publicly traded company.

Corporate Executive Licenses would be issued free of charge and would never need to be renewed. However, the applicant must pass a standardized test on business ethics in order to receive the license. If the person acts unethically or illegally, their license to be employed as a corporate executive could be suspended for a time period or revoked indefinitely. Without this license, it would be unlawful for that person to be employed as a corporate executive in the above capacities.

This prevents a bad executive from one company from jumping ship to another after catching a golden parachute. If you abuse your power as a corporate executive, you should face legal consequences like the rest of professional America.

The Corporate Operation License is a license that would be required for any corporate entity to exist and operate in the United States. It would be granted free of charge to every company, existing or new, and never needs to be renewed. However, if a company as a whole acts unethically or illegally, this license can be suspended for a time period or revoked indefinitely. Without this license in good legal standing, it would be unlawful for any company to conduct business operations.

This way, a company that engages in large-scale fraud may be forced to shut down for a time period - just like a liquor store would after selling to minors. While employees would still be paid salaries, this action will upset customers, anger shareholders, help their competition and present a public blemish on their record. It's a far more effective deterrent than a quiet fine or a class-action settlement with undisclosed terms.

Nobody should be above the law, no matter who they are or how much money they have. These methods make it clear that this is a fact that will be respected.

National Corporate Prizes

National Corporate Prizes

The Alliance Party is pro-business because business is the driver of our capitalist economy. But not all businesses are created equal, and beyond a corporate classification system to promote positive businesses and reduce their operating costs, we also seek to promote outstanding companies through a National Corporate Prize.

As the lifeblood of our capitalist economy, ingenuity must be recognized and rewarded. We intend to award national prizes to outstanding companies and individuals that make our society a better place to live.

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