A bipartisan bill introduced in Congress this week would create new tax incentives for public companies to distribute stock to their rank-and-file employees.
The new SHARE Act would provide a 3 percentage point corporate tax rate reduction for large companies that distribute at least 5% of their stock to the bottom 80% of their employees. The bill is co-sponsored by 11 members of the House Ways and Means Committee, which drafts the tax bill, including both Republicans and Democrats.
“The bottom line is, right now in America, the top 10% own 93% of all stock, while the bottom 50% own only 1%,” Representative Tom Suozzi, D-N.Y., the bill’s sponsor, said on “Squawk Box” on Friday.
Suozzi said that the Shareholder Reward Employee Distribution Plan Act (SHARE) could transfer nearly $4 trillion in stock value to nearly 40 million middle-class Americans once fully implemented.
Suozzi said that for the idea to work, the company would likely need to dilute, issue or repurchase shares, and distribute them to employees. But he believes the 3% tax rate cut would more than offset those costs.
"It's a great idea," Suozzi said. "It might lead to some initial dilution in the stock price, but once the tax rate discount is realized, the stock price will appreciate."
The new bill could also incentivize employee loyalty, he added, because more workers would hold a stake in the companies that employ them.
For companies with massive market caps, like Amazon or Walmart, Suozzi said they could cap the awards at $250,000 worth of stock per employee, instead of giving the full 5%, depending on which makes more sense economically for the company.
The lower tax rate would be available to companies in a year where they granted at least 1% of their stock, or after they have cumulatively granted at least 5%, according to a fact sheet on the bill.
The value of those distributions would be tax deductible for the companies, and the value of the stock granted to each employee would not be counted as part of that person's gross income for tax purposes.
Suozzi said the bipartisan support for the bill shows how Republicans and Democrats are coming together to "stop attacking each other and start attacking the problems that we face."
"We need to expand the ownership society in our country so that people who go to work every day can participate in the great success of this great country," said Suozzi.