[Congressional Record (Bound Edition), Volume 145 (1999), Part 5]
[House]
[Page 6627]
[From the U.S. Government Publishing Office, www.gpo.gov]




                              {time}  1700

   EMPLOYEE OWNERSHIP ACT OF 1999, LEGISLATION AS SIGNIFICANT TO THE 
         AMERICAN PEOPLE AS THE HOMEOWNER'S MORTGAGE DEDUCTION

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from California (Mr. Rohrabacher) is recognized for 5 
minutes.
  Mr. ROHRABACHER. Mr. Speaker, today I am submitting to Congress what 
I believe will be an historic piece of legislation. It is entitled The 
Employee Ownership Act of 1999. This legislation, I predict, will be as 
significant to the American people as the homeowner's mortgage 
deduction, which has ensured the widespread ownership of homes 
throughout the United States of America.
  In fact, 60 percent of the American people own their own homes, and 
this can be traced to the fact that we have written our tax law in a 
way that encourages widespread ownership of housing and homes in the 
United States.
  The goal of my bill is that after 10 years, 30 percent of all of 
America's major corporations will be owned and controlled by their own 
employees. Now, I know that sounds a bit radical. That sounds like a 
big change, but we have had a great deal of employee ownership 
expansion over these last 20 years.
  This bill, under the guise of ESOPS, Employee Stock Ownership Plans, 
what I am proposing is an ESOP-plus-plus idea that would increase 
employee ownership throughout this country.
  This bill will bring about a new category of American business, the 
Employee Owned and Controlled Corporation, EOCC.
  These new corporate structures would be modeled somewhat after United 
Airlines. As we know, the employees at United Airlines bought a 
controlling interest in their own corporation and now make many of the 
decisions that affect United Airlines and thus affect the employees.
  In fact, the legislation I am proposing would establish an employee 
trust that when it owns 50 percent of the shares of a company will be 
entitled to substantial tax incentives that will encourage the growth 
of employee ownership and ensure the success of this new employee owned 
and controlled company.
  Some of the tax incentives suggested by my legislation: Number one, 
if someone sells stock in a company to an employee trust or to the 
employee who is part of the trust, that person shall pay no capital 
gains on the sale of that stock. Thus, someone is given the incentive 
to sell the stock to an employee.
  Employees who accept stock as part of their pay during the creation 
of an employee owned trust, that if they accept it in lieu of their 
pay, they will not have to pay income tax on that stock.
  Of course, corporations have a right not to be a part of an employee 
trust and there are many corporations who will not participate in this 
or employees who will not be part of this, but if, for example, an 
employer or anyone else who owns stock in a company, which is 
establishing an employee trust, if they sell their stock or, let us 
say, they give their stock to an employee trust as part of a bequeathal 
situation, where someone is leaving that in their will to the employee 
trust, then it decreases the inheritance liability on their estate by a 
one-to-one ratio.
  So if someone left a million dollars in their will to an employee 
trust of stock in that company, well, then the inheritance liability to 
their heirs would be reduced by that one million dollars.
  The goal of this, of course, is to expand employee ownership. In the 
end, if we have established these employee owned and controlled 
companies, they will, by my legislation, not pay corporate income tax. 
This will provide a major incentive for Wall Street to work with the 
working people of this country to empower them in a way that they will 
be able to control their own economic destiny as never before.
  This would be the equivalent of the Homestead Act. Many people forget 
that the Republican Party was the party of the Homestead Act. In 1862 
when Abraham Lincoln signed the Emancipation Proclamation, that same 
day he signed the Homestead Act, which opened up the idea of ownership 
of property to millions of people. It was essentially an important part 
of the American dream.
  What we are trying to do now is expand upon that, expand on the home 
mortgage deduction, expand on the Homestead Act, expand on the idea 
that people have a right to own their own home but they also should 
have an incentive in the tax system to own and control their own 
company. Thus, they will control their own economic destiny. This is 
the ultimate empowerment. This will increase productivity. It will see 
that there are no strikes because people would be striking against 
themselves, their own company or at least they would be more willing to 
talk out problems within a company.

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