Social-security compromise

Companies spend small fortunes to optimize their tax liabilities, so when a tax windfall drops into their lap, their natural inclination is to hold onto it. Convincing Czech companies to voluntarily give up their social-tax refunds for the first half of 2007 (brought about by a screw-up in Parliament) will have to be based on more than just good-citizenship arguments. A workable solution might be to tie the refunds to something manufacturing companies have been clamoring for - subsidized reduced work weeks, known as "Kurzarbeit." A formula could be found that takes into account court fees, late-filing penalties, risks to insured employees, and the cost to the state if no compromise is found. Companies that waive their right to a refund could be offered a credit on payroll taxes for maintaining a certain level of employment. It's messy, but much less so than most of the options mentioned so far.