New bill in Congress would reward companies that give stock to rank-and-file employees

A bipartisan bill introduced in Congress this week would create a new tax incentive for public companies to distribute stock to their rank-and-file employees.

The new SHARE Act would give a 3 percentage point discount on the corporate tax rate to large companies that distribute at least 5% of their stock to the lowest paid 80% of employees. It is cosponsored by eleven members of the tax-writing Ways and Means Committee, both Republicans and Democrats.

“The bottom line is that right now in America, the top 10% of wealthy people in the country own 93% of the stock, and the lowest 50% people in the United States of America own 1% of the stock,” said Rep. Tom Suozzi, D-N.Y., a sponsor of the bill, on CNBC’s Squawk Box Friday.

According to Suozzi, the Share Holder Allocation for Rewards to Employees (SHARE) Plan Act, when fully implemented, could result in nearly $4 trillion in stock value being transferred to almost 40 million middle-class Americans.

For the idea to work, companies would likely have to dilute, issue or buy back their shares to distribute them to employees, said Suozzi. But he argued the cost of that would be firmly offset by the 3% tax rate cut.