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The hearings will be held in Room 2221, Dirksen Senate Office Building and will begin at 9:00 A.M. on both days.
In scheduling the additional witnesses for the hearings, Senator Long pointed out "A June 19 New York Times article by Steven Rattner stated that 'Productivity is important since producing more with the same amount of labor is the only way lasting economic growth occurs. When productivity is declining, labor costs increase and prices begin to rise.' A June 20 article in the Washington Star pointed out that 'the downward trend of productivity is one of the most serious problems facing the national economy. Projections of the trend warn of a diminished standard of living, higher labor costs, less competitive prices and more inflation. The article goes on to state that officials recognize 'a deterioration in morale in the work force.' Clearly, the problems of inflation and decreasing employee motivation and productivity are self-contributing.
"I am firmly convinced that providing employees with a permanent stake in their companies by broadening their access to stock ownership will substantially increase their productivity and help to combat this spiraling inflation.”
Senator Long stated that "in addition to receiving testimony regarding the experience of companies which have adopted ESOPs and testimony regarding the various pieces of ESOP legislation which have been introduced this year, the Committee will be exercising its oversight function in that we will receive testimony on problems involving various Federal agencies and employee-owned com. panies under section 803(h) of the Tax Reform Act of 1976."
The additional witnesses scheduled to testify at the Committee hearings, both on July 19 and July 20 are:
1. Mr. A. Dean Swift, President and Chief Administrative Officer, Sears, Roebuck & Company.
2. Mr. W. Reid Thompson, President and Chairman of the Board, Potomac Electric and Power Company.
3. Mr. Andrew J. Biemiller, AFL-CIO.
4. Mr. William R. Denton, Vice President for Industrial Relations, Southern Pacific Company.
5. Mr. Louis O. Kelso, Kelso & Co., Incorporated.
6. Mr. Kenneth R. Cunningham, Chairman of the Board, Metropolitan Contract Services, Inc.
7. Mr. Jim Rice, President, Oklahoma Aerotronics, Inc.
IN THE SENATE OF THE UNITED STATES
JUNE 23 (legislative day, May 17), 1978
read twice and referred to the Committee on Finance
To amend the Internal Revenue Code of 1954, and the Tax
Reduction Act of 1975, with respect to employee stock
Be it enacted by the Senate and House of Representa
2 tives of the United States of America in Congress assembled, 3 That this Act may be cited as the “Expanded Employee 4 Stock Ownership Act of 1978”.
(a) IN GENERAL.-Subpart A of part IV of subchapter
8 A of chapter 1 of the Internal Revenue Code of 1954 (rela9 ting to credits allowed) is amended by inserting after section
1 “SEC. 44C. EMPLOYEE STOCK OWNERSHIP PLAN CON
“ (a) GENERAL RULE.—In the case of a corporation 4 which meets the requirements of section 416, there is allowed
as a credit against the tax imposed by this chapter for the
6 taxable year, an amount equal to the greater of
“(1) Two percent of the qualified investment (as
determined under subsections (c) and (d) of section
9 46) of the taxpayer for the taxable year, or 10
“(2) One percent of the aggregate participants' 11
compensation (as defined in section 415 (c) (3)) paid 12 by the corporation during the taxable year. 13 “(b) TRANSFER OF NEW EMPLOYER SECURITIES RE14 QUIRED.—The credit allowable under subsection (a) for 15 any taxable year shall not be allowed unless, in meeting the 16 requirements of such section for such taxable year, at least 17 half of the value of the employer securities transferred to 18 the trust for that taxable year is represented by new em
19 ployer securities. For purposes of this subsection, the term
20 ‘new employer securities' means employer securities (as 21 defined in section 416 (a) (9)) not previously issued.
"(c) LIMITATION BASED ON Tax LIABILITY; CAR
23 RYOVER OF EXCESS CREDIT.
“(1) LIMITATION.—The amount of the credit
allowed under subsection (a) for the taxable year
shall not exceed the liability of the taxpayer for tax
under this chapter for the taxable year.
“(2) CARRYOVER OF EXCESS CREDIT.—If the amount of the credit determined under subsection (a) for the taxable year exceeds the amount of the limitation imposed by paragraph (1) for such taxable year (hereinafter in this paragraph referred to as the funused credit year'), such excess shall be a credit carryover to the taxable year following the unused credit year, and, subject to the limitation imposed by paragraph (1), shall be taken into account under subsection (a) in such
following taxable year. 13 “(d) LIMITATION WITH RESPECT TO CERTAIN COM14 PANIES.—In the case of a regulated public utility, no credit
shall be allowed by subsection (a) if the taxpayer's cost of 16 service for ratemaking purposes is reduced by reason of any
portion of the credit allowable by subsection (a) (deter18 mined without regard to this subsection), or if the base to 19 which the taxpayer's rate of return for ratemaking purposes 20 is applied is reduced by any reason of any portion of the 21 credit allowed by subsection (a) (determined without regard
22 to this subsection).”.
(b) Subpart B of part I of subchapter D of chapter 1 of
24 such Code is amended by adding at the end thereof the fol
25 lowing new section:
"SEC. 416. SPECIAL EMPLOYEE STOCK OWNERSHIP PLANS.
“(a) PLAN REQUIREMENTS FOR TAXPAYERS CLAIM3 ING SECTION 44C CREDIT.-In order to meet the require
4 ments of this subsection
“(1) Except as expressly provided in subsections (b) and (c), a corporation (hereinafter in this subsection referred to as the employer') shall establish an employee stock ownership plan (described in paragraph (2)) which is funded by transfers of employer securities in accordance with the provisions of paragraph (6) and which meets all other requirements of this subsection.
“(2) The plan referred to in paragraph (1) shall be a defined contribution plan established in writing
"(A) is a stock bonus plan, a stock bonus and a money purchase pension plan, or a profit-sharing
“(B) is designed to investment primarily in employer securities, and
“(C) meets such other requirements (similar to requirements applicable to employee stock ownership plans as defined in section 4975 (e) (7)) as the Secretary may prescribe.
" (3) The plan shall provide for the allocation of all employer securities transferred to it or purchased by