So firstly, that doesn’t matter, because net income is one of the most regulated figures in financial history, and manipulating it has got people into extremely deep trouble. Even rich people. If Amazon paid zero tax, which in most years, it doesn’t, then it is because of the manipulation of tax loopholes, not because of net income manipulation.
Secondly, I don’t advocate for monetary fines as a way to punish corporate lawbreaking at all. No matter what system you choose to calculate fines, there will always be problems with it. There’s a more creative way to go about it.
You might notice that it’s possible to put humans who break laws in jail, but not companies. But there’s a punishment you can inflict on a company that you can’t inflict on a human: you can confiscate part of their existence. The way that would work is a fine denominated in the equity of the company. So a 10% equity fine would mean that 10 new “golden shares” of the company get minted and pass into the possession of the Government, while the remaining common and preferred stock of the company now only represents 90% ownership.
This sort of fine would result in a direct 10% decrease in the stock price of the company, as the holder of the golden shares is now entitled to 10% of the company’s dividends and gets 10% of the votes in corporate elections. Since the golden shares each represent a fixed percentage of equity, they cannot be watered down by the issuance of more stock. The golden shares can either be disposed of or they can become an investment for the state pension fund/sovereign wealth fund.
Since it seems that all stockholders and executives care about nowadays is to make the line go up, forcing the line to go down directly is a great way to discourage the behaviour that results in the line going down.
Your approach of making fines payable in equity might be an interesting way for the UK to renationalise the infamously underperforming private water monopolies. They incur fines all the time for things like pumping sewage into the waterways.
I don’t think they’d use this mechanism though, the whole point of water privatisation was to keep the much-needed infrastructure upgrades off the government’s books and nationalisation in general would subvert this goal. The glaring flaw in that plan is that the regional private monopolies didn’t do the needed upgrades either, and instead paid massive bonuses to their senior managers.
So firstly, that doesn’t matter, because net income is one of the most regulated figures in financial history, and manipulating it has got people into extremely deep trouble. Even rich people. If Amazon paid zero tax, which in most years, it doesn’t, then it is because of the manipulation of tax loopholes, not because of net income manipulation.
Secondly, I don’t advocate for monetary fines as a way to punish corporate lawbreaking at all. No matter what system you choose to calculate fines, there will always be problems with it. There’s a more creative way to go about it.
You might notice that it’s possible to put humans who break laws in jail, but not companies. But there’s a punishment you can inflict on a company that you can’t inflict on a human: you can confiscate part of their existence. The way that would work is a fine denominated in the equity of the company. So a 10% equity fine would mean that 10 new “golden shares” of the company get minted and pass into the possession of the Government, while the remaining common and preferred stock of the company now only represents 90% ownership.
This sort of fine would result in a direct 10% decrease in the stock price of the company, as the holder of the golden shares is now entitled to 10% of the company’s dividends and gets 10% of the votes in corporate elections. Since the golden shares each represent a fixed percentage of equity, they cannot be watered down by the issuance of more stock. The golden shares can either be disposed of or they can become an investment for the state pension fund/sovereign wealth fund.
Since it seems that all stockholders and executives care about nowadays is to make the line go up, forcing the line to go down directly is a great way to discourage the behaviour that results in the line going down.
Your approach of making fines payable in equity might be an interesting way for the UK to renationalise the infamously underperforming private water monopolies. They incur fines all the time for things like pumping sewage into the waterways.
I don’t think they’d use this mechanism though, the whole point of water privatisation was to keep the much-needed infrastructure upgrades off the government’s books and nationalisation in general would subvert this goal. The glaring flaw in that plan is that the regional private monopolies didn’t do the needed upgrades either, and instead paid massive bonuses to their senior managers.