Hillary Clinton proposed employee profit-sharing as a way to boost middle-class incomes in a speech Monday outlining her economic platform, saying that "hard-working Americans deserve to benefit from the record corporate earnings they help to produce."
Clinton, however, left the details of how she would promote profit-sharing to a speech Thursday, saying only that as president she would "encourage" businesses to promote profit-sharing arrangements.
Three options the Democrats' front-runner might consider were laid out in a January report on progressive economics published by the Center for American Progress, a nonprofit think tank with ties to Clinton's campaign.
1. Increase tax incentives for incentive-based pay. Under the current tax code, some public companies are able to deduct some performance-based bonuses from tax liabilities. Congress could expand the tax benefits for incentive-based pay for workers by conditioning the deduction on the incentive-based pay being spread across all employees.
2. Boost the existing tax benefits of employee stock ownership plans.
Employee stock ownership plans are a form of employee benefit in which employees are given accounts with a company trust fund that includes the firm's shares.
According to the National Center for Employee Ownership, such plans are maintained by 7,000 companies with 13.5 million employees, including the supermarket chains Publix and Price Chopper.
Employee stock ownership plans already receive a number of tax advantages, depending on the form of company and plan. For example, under current law, contributions of new shares or cash to the trust fund are tax deductible, as are payments on loans used to buy the shares. Those tax benefits could be expanded to incentivize more companies to take advantage of them.
3. A new office to promote employee ownership.
Given that the tax code already gives privileges to employee profit-sharing, the government could do more to make companies aware of the benefits. In its paper, the Center for American Progress suggested an "Office of Inclusive Capitalism" at the Department of Commerce to promote such plans.
Options one and two would require new tax breaks that would cut against the purpose of tax reform, favored by Democrats and Republicans, to lower corporate tax rates while cutting deductions, credits and other preferences.
Clinton argued Monday that aligning the interest of employees with corporations by sharing in profits "can boost by productivity and put money directly into employee's pockets: it's a win-win."