Mark Cuban: Tax Increase for Companies Not Sharing Equity
Mark Cuban suggested that if founders and CEOs do not proportionally share the wealth created by the company with all employees, they should return it to society through higher corporate taxes.
In response to a question on social media about how to narrow the wealth gap, he wrote: tax companies that do not provide equity to every employee in proportion to non-founder executives; "They get rich off the market, and employees should too." He stated that this is how he runs his companies, noting that most wealthy individuals' fortunes come from selling companies or going public. In a podcast, he proposed changing the 21% corporate tax rate into a reward: to maintain that tax rate, every employee must receive stock options or equity equivalent to the same percentage as the CEO relative to their cash salary. For example, if the CEO's cash salary is $1 million and stock is $100,000, then a janitor earning $50,000 should also receive stock worth 10% of their salary, rather than the same dollar amount.
He cited his own transactions as examples. In 1990, he sold MicroSolutions to CompuServe for about $6 million, distributing about 20% of the proceeds to around 80 employees who had been with the company for over a year. In 1999, Yahoo acquired Broadcast.com for about $5.7 billion, making around 300 of the 330 employees millionaires due to their stock holdings. When selling a majority stake in a high-definition television network, he distributed about 20% of the proceeds; during the majority stake transaction of the Dallas Mavericks, employee bonuses totaled over $35 million. He noted that every company he sold provided bonuses to those who had been with the company for over a year, with only the high-definition television network experiencing layoffs after the transaction. He is currently co-founding an online pharmacy, Cost Plus Drugs.
He described equity distribution as the fastest path to narrowing income disparity, as employees directly benefit when the company appreciates in value. In response to criticism that taxes would be passed on to consumers, he stated that founders decide profit margins themselves and noted that widening income gaps could lead to unrest, which is the most expensive tax for businesses. He also mentioned that even if only about 40% of tax revenue reaches those in need, it still holds value for the community.
From a market mechanism perspective, this is a tax design initiative, not a dividend distribution from a specific company. Buyers are focused on policies that reduce equity concentration, while sellers can choose between "broad-based options" or "higher tax rates." If legislated, funds would flow from the tax returns of companies that do not distribute equity into the treasury or from the options pool into employees' exercise accounts. The beneficiaries would be regular employees sharing in the profits upon exit or IPO, while the burden would fall on founders and existing shareholders who concentrate options among executives—diluting the same profits. The 21% tax rate linked to equity distribution effectively writes labor law into the tax code, and whether it becomes a bill depends on Congress's response.
In supplementary remarks, he emphasized that aligning as many stakeholders as possible would amplify both economic and personal returns.
Source: Public Information
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Cuban upgrades charitable distribution into a tax rate switch. The 300 millionaires from Broadcast.com serve as his credibility collateral to prove that broad-based options do not kill companies; they merely change distribution upon exit. Tax increases are not the first choice but a punitive price for "only giving options to C-level executives": to achieve 21%, janitors must be included in the same percentage. Percentages rather than absolute amounts avoid directly copying the CEO's $100,000 stock to low-wage positions and prevent union-style fixed bonuses.
The capital path is to replace union negotiations with tax codes. He does not demand nationalization or mandatory profit sharing but requires options to be proportional to cash compensation, turning employees into small shareholders who can cash out alongside non-founder executives during an IPO or sale. The 20% cash distribution from MicroSolutions is an early version, Broadcast.com is an equity version, and the Mavericks are a transaction bonus version. Cost Plus Drugs presents price transparency as a product, aligning with the narrative of "employee sharing in the upside": reducing middlemen's cut. Wealth concentration, in his view, occurs during sales and IPOs, not in monthly salaries, so the strategy targets exit events rather than minimum wage.
The analogy is not as mild as ESOP tax incentives; it is closer to setting broad-based options as a condition for enjoying the standard tax rate, similar to certain countries setting thresholds for R&D deductions. The industry is at a stage where tech stock options skew towards executives, retail investors hold shares indirectly through 401k plans, and frontline employees still receive salaries. The myth of options at private giants like SpaceX reinforces the idea that "equity changes destiny"; Cuban aims to make this myth a default clause.
Structural changes belong to regulatory changes. Corporate tax shifts from a uniform rate to a behavioral tax rate: dilute equity for a lower tax rate, do not dilute for a higher tax rate. The mechanism is to use tax differentials to compel founders to choose between diluting equity and paying higher taxes; employee wealth is tied to exits while daily wages are still priced by the labor market. He refers to unrest as the most expensive tax, effectively discounting social stability into business costs. Whether the initiative can be legislated depends on Congress's willingness to write the options formula into the tax code, rather than whether Cuban's next deal will distribute dividends again.
ABAB News · Cognitive Law
- Wealth is mostly formed during sales and IPOs, not on monthly paychecks.
- Tax rates can act as a switch, forcing companies to choose between diluting equity and paying higher taxes.
- Providing janitors with the same percentage of options is more executable than giving them the same dollar amount.