[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 2244 Introduced in Senate (IS)]







106th CONGRESS
  2d Session
                                S. 2244

    To increase participation in employee stock purchase plans and 
 individual retirement plans so that American workers may share in the 
growth in the United States economy attributable to international trade 
                              agreements.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 9, 2000

 Mr. Wyden (for himself and Mr. Baucus) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
    To increase participation in employee stock purchase plans and 
 individual retirement plans so that American workers may share in the 
growth in the United States economy attributable to international trade 
                              agreements.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.

    (a) Short Title.--This Act may be cited as the ``Working Families 
Trade Bonus Act''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.

SEC. 2. FINDINGS AND PURPOSE.

    (a) Findings.--Congress finds that--
            (1) exports represent a growing share of United States 
        production, and exports have accounted for more than 10 percent 
        of the United States gross domestic product in recent years,
            (2) export growth represented more than 36 percent of 
        overall United States growth in gross domestic product between 
        1987 and 1997,
            (3) international trade flows in the United States have 
        grown twice as fast as the economy since 1950, and, in real 
        terms, the growth rate for international trade has averaged 
        about 6.5 percent a year,
            (4) between 1987 and 1997, more than 5,500,000 United 
        States jobs have been created by international trade,
            (5) the globalization of the United States economy demands 
        that appropriate domestic policy measures be undertaken to 
        assure American workers enjoy the benefits of globalization 
        rather than be undermined by it, and
            (6) when the domestic economy and United States companies 
        achieve growth and profits from international trade, workers 
        ought to share in the benefits.
    (b) Purpose.--It is the purpose of this Act to assist American 
workers in benefiting directly when international trade produces 
domestic economic growth.

                          TITLE I--TRADE BONUS

SEC. 101. DETERMINATION AND ANNOUNCEMENT OF TRADE BONUS.

    (a) Determination.--
            (1) In general.--The Secretary of Commerce or the 
        Secretary's delegate shall, for each calendar year after 1998, 
        determine whether international trade of the United States 
        contributed to an increase in the gross domestic product of the 
        United States for such calendar year.
            (2) Time for determination; submission.--The Secretary 
        shall make and submit to the President the determination under 
        paragraph (1) as soon as practicable after the close of a 
        calendar year, but in no event later than June 1 of the next 
        calendar year. Such determination shall be made on the basis of 
        the most recent available data as of the time of the 
        determination.
    (b) Inclusion in Budget.--The President shall include the 
determination under subsection (a) with the supplemental summary of the 
budget for the fiscal year beginning in the calendar year following the 
calendar year for which the determination was made.

      TITLE II--PROVISIONS TO ENSURE WORKERS SHARE IN TRADE BONUS

SEC. 201. UNITED STATES POLICY ON INTERNATIONAL TRADE BONUS.

    (a) General Policy of the United States.--It is the policy of the 
United States that if there is an increase in the portion of the gross 
domestic product of the United States for any calendar year which is 
attributable to international trade of the United States--
            (1) workers ought to share in the benefits of the increase 
        through--
                    (A) the establishment of employee stock purchase 
                plans by employers that have not already done so,
                    (B) the expansion of employee stock purchase plans 
                of employers that have already established such plans, 
                and
                    (C) the opportunity to make additional 
                contributions to individual retirement plans if the 
                workers are unable to participate in employee stock 
                purchase plans,
            (2) employers should contribute additional compensation to 
        such employee stock purchase plans in an amount up to $2,000 
        per employee, and
            (3) workers should contribute additional amounts up to 
        $2,000 to individual retirement plans.
    (b) Guidelines.--It is the policy of the United States that any 
employer establishing or expanding an employee stock purchase plan 
under the policy stated under subsection (a) should--
            (1) provide that the amount of additional stock each 
        employee is able to purchase in any year there is a trade bonus 
        is the amount determined by the employer but not in excess of 
        $2,000,
            (2) make the plan available to the widest range of 
        employees without discriminating in favor of highly compensated 
        employees,
            (3) allow for the purchase of the maximum amount of stock 
        allowed by law at the lowest price allowed by law, and
            (4) ensure that the establishment or expansion of such 
        plan--
                    (A) provides employees with compensation that is in 
                addition to the compensation they would normally 
                receive, and
                    (B) does not result in a lack of diversification of 
                an employee's assets, particularly such employee's 
                retirement assets.

SEC. 202. ELIMINATION OF CAPITAL GAINS TAX ON GAIN FROM STOCK ACQUIRED 
              THROUGH EMPLOYEE STOCK PURCHASE PLAN.

    (a) In General.--Part I of subchapter P of chapter 1 (relating to 
treatment of capital gains) is amended by adding at the end the 
following new section:

``SEC. 1203. EXCLUSION FOR GAIN FROM STOCK ACQUIRED THROUGH EMPLOYEE 
              STOCK PURCHASE PLAN.

    ``(a) General Rule.--Gross income of an employee shall not include 
gain from the sale or exchange of stock--
            ``(1) which was acquired by the employee pursuant to an 
        exercise of a trade bonus stock option granted under an 
        employee stock purchase plan (as defined in section 423(b)), 
        and
            ``(2) with respect to which the requirements of section 
        423(a) have been met before the sale or exchange.
    ``(b) Trade Bonus Stock Option.--For purposes of this section--
            ``(1) In general.--The term `trade bonus stock option' 
        means an option which--
                    ``(A) is granted under an employee stock purchase 
                plan (as defined in section 423(b)) for a plan year 
                beginning in a calendar year following a calendar year 
                for which a trade bonus percentage has been determined 
                under section 101 of the Working Families Trade Bonus 
                Act, and
                    ``(B) the employer designates, at such time and in 
                such manner as the Secretary may prescribe, as a trade 
                bonus stock option.
            ``(2) Annual limitation.--Options may not be designated as 
        trade bonus stock options with respect to an employee for any 
        plan year to the extent that the fair market value of the stock 
        which may be purchased with such options (determined as of the 
        time the options are granted) exceeds $2,000.''
    (b) Conforming Amendments.--
            (1) Paragraph (9) of section 1(h) (relating to maximum 
        capital gains rate) is amended by striking ``and section 1202 
        gain'' and inserting ``section 1202 gain, and gain excluded 
        from gross income under section 1203(a)''.
            (2) Section 172(d)(2)(B) (relating to modifications with 
        respect to net operating loss deduction) is amended by striking 
        ``section 1202'' and inserting ``sections 1202 and 1203''.
            (3) Section 642(c)(4) (relating to adjustments) is amended 
        by inserting ``or 1203(a)'' after ``section 1202(a)'' and by 
        inserting ``or 1203'' after ``section 1202''.
            (4) Section 643(a)(3) (defining distributable net income) 
        is amended by striking ``section 1202'' and inserting 
        ``sections 1202 and 1203''.
            (5) Section 691(c)(4) (relating to coordination with 
        capital gain provisions) is amended by inserting ``1203,'' 
        after ``1202,''.
            (6) The second sentence of section 871(a)(2) (relating to 
        capital gains of aliens present in the United States 183 days 
        or more) is amended by inserting ``or 1203'' after ``section 
        1202''.
            (7) The table of sections of part I of subchapter P of 
        chapter 1 is amended by adding at the end the following:

                              ``Sec. 1203. Exclusion for gain from 
                                        stock acquired through employee 
                                        stock purchase plan.''
    (c) Effective Date.--The amendments made by this section shall 
apply to stock acquired on and after the date of the enactment of this 
Act.

SEC. 203. TRADE BONUS CONTRIBUTIONS TO INDIVIDUAL RETIREMENT PLANS.

    (a) In General.--Section 219(b) (relating to maximum amount of 
deduction) is amended by adding at the end the following new paragraph:
            ``(5) Additional contributions in trade bonus years.--
                    ``(A) In general.--If there is a determination 
                under section 101 of the Working Families Trade Bonus 
                Act that there is a trade bonus for any calendar year, 
                then, in the case of an eligible individual, the dollar 
                amount in effect under paragraph (1)(A) for taxable 
                years beginning in the subsequent calendar year shall 
                be increased by $2,000.
                    ``(B) Eligible individual.--For purposes of 
                subparagraph (A), the term `eligible individual' means, 
                with respect to any taxable year, any individual other 
                than an individual who is eligible to receive a trade 
                bonus stock option (as defined in section 1203(b)) for 
                a plan year beginning in the taxable year.''
    (b) Conforming Amendments.--
            (1) Section 408(a)(1) is amended by striking ``in excess of 
        $2,000 on behalf of any individual'' and inserting ``on behalf 
        of any individual in excess of the amount in effect for such 
        taxable year under section 219(b)(1)(A)''.
            (2) Section 408(b)(2)(B) is amended by striking ``$2,000'' 
        and inserting ``the dollar amount in effect under section 
        219(b)(1)(A)''.
            (3) Section 408(b) is amended by striking ``$2,000'' in the 
        matter following paragraph (4) and inserting ``the dollar 
        amount in effect under section 219(b)(1)(A)''.
            (4) Section 408(j) is amended by striking ``$2,000''.
            (5) Section 408(p)(8) is amended by striking ``$2,000'' and 
        inserting ``the dollar amount in effect under section 
        219(b)(1)(A)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

SEC. 204. CREDIT FOR SMALL EMPLOYER STOCK PURCHASE PLAN START-UP COSTS.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
(relating to business related credits) is amended by adding at the end 
the following new section:

``SEC. 45D. SMALL EMPLOYER STOCK PURCHASE PLAN CREDIT.

    ``(a) General Rule.--For purposes of section 38, in the case of an 
eligible employer, the small employer stock purchase plan credit 
determined under this section for any taxable year is an amount equal 
to the qualified start-up costs paid or incurred by the taxpayer during 
the taxable year.
    ``(b) Limits on Start-Up Costs.--In the case of qualified start-up 
costs not paid or incurred directly for the establishment of a 
qualified stock purchase plan, the amount of the credit determined 
under subsection (a) for any taxable year shall not exceed the lesser 
of 50 percent of such costs or--
            ``(1) $2,000 for the first taxable year ending after the 
        date the employer established the qualified employer plan to 
        which such costs relate,
            ``(2) $1,000 for each of the second and third such taxable 
        years, and
            ``(3) zero for each taxable year thereafter.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Eligible employer.--
                    ``(A) In general.--The term `eligible employer' 
                means, with respect to any year, an employer which has 
                100 or fewer employees who received at least $5,000 of 
                compensation from the employer for the preceding year.
                    ``(B) Requirement for new qualified employer 
                plans.--Such term shall not include an employer if, 
                during the 3-taxable year period immediately preceding 
                the 1st taxable year for which the credit under this 
                section is otherwise allowable for a qualified stock 
                purchase plan of the employer, the employer and each 
                member of any controlled group including the employer 
                (or any predecessor of either) established or 
                maintained an employee stock purchase plan with respect 
                to which contributions were made, or benefits were 
                accrued, for substantially the same employees as are in 
                the qualified stock purchase plan.
            ``(2) Qualified start-up costs.--The term `qualified start-
        up costs' means any ordinary and necessary expenses of an 
        eligible employer which are paid or incurred in connection 
        with--
                    ``(A) the establishment or maintenance of a 
                qualified stock purchase plan in which employees are 
                eligible to participate, and
                    ``(B) providing educational information to 
                employees regarding participation in such plan and the 
                benefits of participating in the plan.
        Such term does not include services related to retirement 
        planning, including tax preparation, accounting, legal, or 
        brokerage services.
            ``(3) Qualified stock purchase plan.--
                    ``(A) In general.--The term `qualified stock 
                purchase plan' means an employee stock purchase plan 
                which--
                            ``(i) allows an employer to designate 
                        options as trade bonus stock options for 
                        purposes of section 1203,
                            ``(ii) limits the amount of options which 
                        may be so designated for any employee to not 
                        more than $2,000 per year, and
                            ``(iii) does not discriminate in favor of 
                        highly compensated employees (within the 
                        meaning of section 414(q)).
                    ``(B) Employee stock purchase plan.--The term 
                `employee stock purchase plan' has the meaning given 
                such term by section 423(b).
    ``(d) Special Rules.--
            ``(1) Aggregation rules.--All persons treated as a single 
        employer under subsection (a) or (b) of section 52, or 
        subsection (n) or (o) of section 414, shall be treated as one 
        person. All qualified stock purchase plans of an employer shall 
        be treated as a single qualified stock purchase plan.
            ``(2) Disallowance of deduction.--No deduction shall be 
        allowable under this chapter for any qualified start-up costs 
        for which a credit is determined under subsection (a).
            ``(3) Election not to claim credit.--This section shall not 
        apply to a taxpayer for any taxable year if such taxpayer 
        elects to have this section not apply for such taxable year.''
    (b) Credit Allowed as Part of General Business Credit.--Section 
38(b) (defining current year business credit) is amended by striking 
``plus'' at the end of paragraph (11), by striking the period at the 
end of paragraph (12) and inserting ``, plus'', and by adding at the 
end the following new paragraph:
            ``(13) in the case of an eligible employer (as defined in 
        section 45D(c)), the small employer stock purchase plan credit 
determined under section 45D(a).''
    (c) Portion of Credit Refundable.--Section 38(c) (relating to 
limitation based on amount of tax) is amended by adding at the end the 
following new paragraph:
            ``(4) Portion of small employer pension plan credit 
        refundable.--
                    ``(A) In general.--In the case of the small 
                employer stock purchase plan credit under subsection 
                (b)(13), the aggregate credits allowed under subpart C 
                shall be increased by the lesser of--
                            ``(i) the credit which would be allowed 
                        without regard to this paragraph and the 
                        limitation under paragraph (1), or
                            ``(ii) the amount by which the aggregate 
                        amount of credits allowed by this section 
                        (without regard to this paragraph) would 
                        increase if the limitation under paragraph (1) 
                        were increased by the taxpayer's applicable 
                        payroll taxes for the taxable year.
                    ``(B) Treatment of credit.--The amount of the 
                credit allowed under this paragraph shall not be 
                treated as a credit allowed under this subpart and 
                shall reduce the amount of the credit allowed under 
                this section for the taxable year.
                    ``(C) Applicable payroll taxes.--For purposes of 
                this paragraph--
                            ``(i) In general.--The term `applicable 
                        payroll taxes' means, with respect to any 
                        taxpayer for any taxable year--
                                    ``(I) the amount of the taxes 
                                imposed by sections 3111 and 3221(a) on 
                                compensation paid by the taxpayer 
                                during the taxable year,
                                    ``(II) 50 percent of the taxes 
                                imposed by section 1401 on the self-
                                employment income of the taxpayer 
                                during the taxable year, and
                                    ``(III) 50 percent of the taxes 
                                imposed by section 3211(a)(1) on 
                                amounts received by the taxpayer during 
                                the calendar year in which the taxable 
                                year begins.
                            ``(ii) Agreements regarding foreign 
                        affiliates.--Section 24(d)(3)(C) shall apply 
                        for purposes of clause (i).''
    (d) Conforming Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 is amended by adding at the end 
the following new item:

                              ``Sec. 45D. Small employer stock purchase 
                                        plan credit.''
    (e) Effective Date.--The amendments made by this section shall 
apply to costs paid or incurred in connection with qualified stock 
purchase plans established after the date of the enactment of this Act.
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