EOnation: UK Tax Policy and Unanticipated Consequences

["Jacquelyn Yates" <Yates@salem.kent.edu>]

Dear Aidan, I would not have realized that the AESOP policy wouldn't encourage 
employee shareholding -- it sounds like such a good deal.  I am wondering how 
it is that most employees wouldn't be liable for some capital gains tax. What's 
the reason for that?  Is capital gains tax in the UK progressively structured 
and proportional to income?   

Your point shows that well-intentioned fiscal incentives can be perverse. Do 
you think the Government had any idea of this problem when they adopted the new 
policy?   

Your response pushed me further in thinking that if government policy doesn't 
compel employees to hold their shares for a long period, they probably won't do 
so.   

I guess that shareholding is a also new experience for the average employee, 
and that education is needed before they can see how the benefits can work.  
Most employees don't understand the management of enterprises,  and they don't 
have enough information to connect their activities in the cubicle or on the 
shop floor with improvement in stock value.  Nor do they have the skills needed 
to convert their individual knowledge of how to improve the enterprise into a 
common plan of action.   

U.S. research shows that employee-owned companies outperform their traditional 
counterparts only when there is employee participation in firm management and 
governance.  And participation is the best kind of education -- experiential 
education. 

What kinds of employee education and training are happening in the AESOP 
companies? 




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Jacquelyn Yates, Ph.D.                
Political Science                                   
Kent State University - Salem         
2491 S.R. 45 South     
Salem, OH 44460

yates@mail.salem.kent.edu
FAX  330-332-9256 
Tel. 330-337-4282



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