Proposed Employee Ownership Act

Employee Ownership Act Proposal

Executive Summary

This proposal is for a new act of congress that would encourage public companies (and even private ones) to give stock to their employees and promote employee ownership of a majority share of the business.  It should have the following attributes:

• Create a new type of stock (Employee Stock).  This would be a type of voting stock that is restricted to employees (and former employees) of the company.  It cannot be publicly traded directly but can be swapped out for common stock, therefore it will follow the same price as common stock.
• Encourage companies, through tax incentives and other means to grant employees this new class of stock.  This should be structured so that if they give more Employee Class stock to lower level employees, they can give larger bonuses and common stock to their executives.  They must also allow that an employee can buy stock, at the common stock price if they so desire.
• Encourage employees to keep and hold this stock, again through tax incentives.
• Create a new type of account, similar to a 401k to allow employees to hold these stocks and have it grow tax deferred until retirement.  As they change employers, they can either swap out stock from their previous employer for their new employer (with no tax penalty) or start over, retaining the stock from the previous employer and just earning new stock from current.  If they cash out of their old stocks, then they pay the standard capital gains tax for profits on purchased stock and stock given to them as bonus.
  
• Encourage corporations (both public and private) to offer over 50% of this Class E stock, so that the employee/shareholders have controlling interest in the company.  This would allow employees more control over executive salaries based on current Dodd-Frank rules.