Introduction of Legislation to Expand Employee Ownership

Floor Speech

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Mr. ROHRABACHER. Mr. Speaker, today Congressman Collin Peterson and I introduced legislation that will expand employee ownership throughout America. This legislation is a bold proposal that, if enacted, will put management and labor on the same side, thus fostering cooperation rather than conflict.

President Jefferson recognized ownership of private property as the keystone of a free society. Only a few decades after Jefferson's presidency, Abraham Lincoln pushed for, and Congress delivered, the Homestead Act of 1862, which has proven to be one of the most important manifestations of Jefferson's vision for broad-based ownership of property. More recently, President Reagan supported employee stock ownership, labeling it ``the next logical step ..... a path that benefits a free people.''

The belief that all citizens should be able to acquire property and wealth made our country the envy of the world. This legislation is consistent with the vision of our founding fathers because it empowers employees--not just a select few at the top of the management structure--to share in the development, success, and profits of a company. Our proposal would enhance accountability, productivity, and prosperity by making sure all employees--both inside and outside of management--keep an eye toward the long-term interests of their company.

Our proposal would provide certain tax benefits to employees who are recipients of a broad distribution of voting company stock, so long as that stock is held for a specified amount of time. Specifically, when an employer makes an across-the-board distribution of voting stock, the value of the grant would not be counted as an employee's taxable income, provided that the same number of shares is granted to every employee and the stock is held for five years. If held for ten years, employee stockholders can begin to sell or exchange a portion of their stock for other similarly-priced stock free of capital gains. Thus, after 20 years, the stock would be totally tax free.

The provisions of this bill are carefully crafted to allow for the empowerment of employees and the diversification of an employee's portfolio. The phase-in of the capital-gains-free treatment is meant to ensure that the company stock will not simply be dumped all at once.

One of the most important aspects of my bill is that it would, unlike traditional ESOPs, allow employees to directly own the stock granted to them, including all voting rights granted to any other normal stockholder. This would empower employees to exercise oversight of their managers in an enlightened and responsible manner, and create a spirit of corporate unity rather than the adversarial labor-versus-management environment that is all too pervasive in corporate America today. It also gives the American working people the chance to benefit not just from physical and mental labor, but to profit from capital--from corporate income, as well as their own time and energy.

I ask my colleagues to join me in support of this legislation and let us lead the way forward to prosperity for millions of Americans in the years to come.

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