Proposal: Alteration to Federal (and State) IRS tax code to allow valuation of individual headcount as intangible assets.
Purpose: Establish a basic value (e.g. $10,000 USD) per full-time or part-time employee to be recorded as an intangible asset on an organization’s balance sheet.
Conditions: Does not differentiate employee headcount by any Title IX categories or payroll expense in calculating base employee value (i.e. a CEO is equal to a mailroom clerk for the purposes of base valuation)
Benefit and Risk Analysis:
Does not affect Income Statement (tax revenue) or alter normal payroll-related expenses.
Adds a “book value” for retaining and re-deploying employees for growth and/or surge capacity purposes.
The $10,000 USD valuation represents a basic worth of an individual based upon 50 percent of a federal minimum wage, less indirect and overhead expenses. It represents only a general approximation and is designed to level-out over the payroll headcount population.
Easily auditable as asset valuations (per balance sheet) are routinely audited by financial lenders, IRS, SEC, et.al – reconcilable against required payroll records. (1 SSN/TIN = 1 headcount)
We treat office furniture, computers, and capitalized assets as valuable because they are a measurement of an organization’s overall stability.
Employers who retain headcount, even if relatively idle or unapplied, are recognized financially for higher stability or capacity.
Employee headcount size should be an equal measure of a firm’s size, capacity and potential stability similar to how retaining capital assets and other forms of personal property increase an organization’s “book” value.
Encourages headcount retention, and discourages mass layoffs in favor of seeing longer term strategic investment in assets.
Discourages mass outsourcing of production labor to non-payroll entities by encouraging workforce stability.
Can build-in effective workplace presence conditions to encourage on-site workplace improvement (a person is counted as an asset, if primary work is at an organization’s established work location; work from home, remote work or field workers are not counted as an intangible asset for this recategorization – only work positions given a permanent work locations can be counted.)
Organizations seeking to abuse this policy are effectively self-policed. Inflated headcounts for over-valuation purposes are auditable, and ineffective at influencing Income Statement results (these are non-depreciated intangible assets.)
See-saw hiring and firing is discouraged as temporarily inflating asset valuation is similar to the effect of short-term seasonal location leasing (inflates short-term expenses and is adjusted during balance sheet analysis for purposes of capital valuation).
Existing Generally Accepted Accounting Practices need little to no modification to adopt this revision. The execution is the addition of an Intangible Asset category based upon payroll headcount multiplied by a fixed value (per above suggested $10,000 USD value)
An organization that attempts to abuse this intangible asset category, e.g. hiring 90 percent executive level employees and 10 percent production staff, sees the same value as a 10 percent executive staff with 90 percent production employees, but the effective impact is the high-expense to income ratio of the former versus the latter. (Asset Turnover ratios account for this attempt to circumvent the intent of this revision.)