Capital Gains Tax Co-Operative Bill (law'd)

[Badger]

I think "workers" should be defined here. Is the CEO a "worker" of a company?

Everyone who is employed in the company.

Then I oppose this bill. This would be good only for management.

With an income limit of $ 50,000, I would support this bill.

Hmm. What does everyone else think of this idea?

Overall I LOVE this bill. Wish I'd thought of it.

Regarding the amendment, I'm not opposed to it per se, but question whether ir is necessary. Winston, can you tell us whether CEO's and the like are actually subject to the RL legal provisions of ESOP's?

[Badger]

I think "workers" should be defined here. Is the CEO a "worker" of a company?

Everyone who is employed in the company.

Then I oppose this bill. This would be good only for management.

With an income limit of $ 50,000, I would support this bill.

Hmm. What does everyone else think of this idea?

Overall I LOVE this bill. Wish I'd thought of it.

Regarding the amendment, I'm not opposed to it per se, but question whether ir is necessary. Winston, can you tell us whether CEO's and the like are actually subject to the RL legal provisions of ESOP's?

I'm not sure.

Me neither. Upon consideration, maybe Hans's amendment is a good idea. Just to be safe and assume ESOP's cover everyone from the janitor to the CEO.

With the amendment, I'd support this bill 101%.;

[Badger]

In that case, I'd like to offer an amendment:

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Since the amendment is offered by the Sponsor, senators have 24 hours to request a roll call vote.

Mr. PPT, I would time to offer an amendment to the amendment. It keeps the idea the same, but irons out the language. For example, I assume Winston wanted to exempt the first $50k of capital gains taxation from ESOP dividends, rather than exempt only those individuals earning under $50k/year. The result under current language would mean someone earning $49k a year would be exaempt from capital gains, while his poor schmuck of a co-worker earning $51k would be subject to all capital gains taxation. Again, I assume this is not what Winston intends (please correct me if I'm wrong here, WD).

The only down side is I'll have to do a little research on ESOPs on line. Wikipedia actually seems to have a well-researched article judging from the links I read. I strongly suggest Senators take 2 minutes to review it, particularly the paragraph regarding "Benefits to Employees" which discusses the tax benefits of ESOPs.

I'll try to do it as fast as possible, but can't guarantee 24 hours.

Any objection to all this Winston? Again, love the idea--I just want to hammer out the language to impliment this idea fully.

EDIT: Oh yeah. Here's that article I mentioned:

http://en.wikipedia.org/wiki/ESOP

[Badger]

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The bill has been amended to the above.

In that case, I'd like to offer an amendment:

You must be logged in to read this quote.

Since the amendment is offered by the Sponsor, senators have 24 hours to request a roll call vote.

Mr. PPT, I would time to offer an amendment to the amendment. It keeps the idea the same, but irons out the language. For example, I assume Winston wanted to exempt the first $50k of capital gains taxation from ESOP dividends, rather than exempt only those individuals earning under $50k/year. The result under current language would mean someone earning $49k a year would be exaempt from capital gains, while his poor schmuck of a co-worker earning $51k would be subject to all capital gains taxation. Again, I assume this is not what Winston intends (please correct me if I'm wrong here, WD).

The only down side is I'll have to do a little research on ESOPs on line. Wikipedia actually seems to have a well-researched article judging from the links I read. I strongly suggest Senators take 2 minutes to review it, particularly the paragraph regarding "Benefits to Employees" which discusses the tax benefits of ESOPs.

I'll try to do it as fast as possible, but can't guarantee 24 hours.

Any objection to all this Winston? Again, love the idea--I just want to hammer out the language to impliment this idea fully.

EDIT: Oh yeah. Here's that article I mentioned:

http://en.wikipedia.org/wiki/ESOP

Since the previous amendment amended the entire text, you might as well just offer your amendment as an amendment to the bill rather than an amendment.

Do you plan to compile this admendment together for us?

Yes, by popular demand I will. But not until tomorrow....

[Badger]

Bad day at work. Make that tomorrow.

(2 projects due now...)

[Badger]

I offer the following proposed amendment:

"All distributions made from an ESOP, as defined under Atlasian tax law, shall be subject to 70% of the effective rate of federal capital gains taxation up to the first $150,000 distributed from a single qualified employee's ESOP account."

Judging from this very helpful website: http://www.nceo.org/main/article.php/id/8/ it appears that the issue of capital gains taxation only arises when the ESOP account is distributed to the employee, usually upon retirement or otherwise leaving employment. See paragraph #7 near bottom of page.

I tried to combine Winston (and my) desire to encourage the growth of employee investments in ESOPs, plus Hans's cogent concerns about extending such costly tax benefits to those wealthy enough to little need such additional help. I originally considered drafting the language to exempt entirely from capital gains tax the first $50k of ESOP account distributions. But looking at my own state deferred comp account on my decidedly middle class income, I realized that most middle class workers could easily accrue 2-3 times that much in a career. By only exempting the first $50k, that creates a disincentive to continue contributing fully to one's ESOP account once it reaches that amount. There are other tax benefits to contributing to an ESOP as the linked article details, but limiting the tax benefits here to maybe a third of a middle-class earner's retirement account seemed contrary to the goals of this bill.

So, I rewrote the numbers to assess capital gains taxation at only 70% of the applicable rate to the first $150k. e.g. If the capital gains tax rate is 20%, the first $150k of ESOP account distributions would be subject to only a 14% capital gains tax (20% x .70 =14%). These numbers add up to about the same level of taxation of a $150k ESOP account as simply not taxing the first $50k entirely. Thus, this formula continues the incentive for employees to contribute to their ESOP accounts 3 times as long for the same cost to the treasury.
Technically, a rate of "2/3" the current capital gains tax rate would be identical to simply exempting the first $50k, but I chose 70% as it would avoid the complication of having to multiply an (e.g.) 18.4% capital gains rate by 0.66666666666 rather then simply multiplying by 0.7 to determine the correct ESOP tax rate.

Questions or comments (especially you Winston, as it's your bill this proposal would amend)?

[Badger]

This seems to be in order. What does everyone else think? Should I propose the rewritten bill?

Glad you like.

[Badger]

AYE.

[Badger]

AYE.

[Badger]

x Afleitch

I took time to review this in detail. My express thanks to Senator Badger for his effort in amending the bill and explaining it's benefits.

Thank you, Mr. President. It was Winston's great idea in the first place, I just nitpicked tidied up the language a bit.