The House on September 22, 2016, approved by a 287 to 124 vote the Empowering Employees through Stock Ownership Act (H.R. 5719), a bipartisan, bicameral proposal to allow employees of non-public firms to defer taxes on their stock options.

The bill, sponsored by Ways and Means Member Rep. Erik Paulsen (R-MN), is intended to encourage employee ownership in startup companies by making it easier for employees at all levels to use their stock options, according to a Ways and Means news release. "By facilitating employee ownership, this legislation will not only help startups attract talent — it will allow their workers to own a stake in that next breakthrough product or service," Chairman Kevin Brady (R-TX) stated.

A Paulsen release said employees at many startup companies are offered stock options that, if exercised, require immediate payment of taxes, "often times before they may have the available cash to do so." The Empowering Employees through Stock Ownership Act will help startup companies attract and keep top talent by allowing employees to defer the taxes on their stock options until they are likely to have the funds necessary to make their tax payment, the release stated.

A Joint Committee on Taxation description (JCX-74-16) put the cost of the bill at roughly $1 billion over 10 years. During Ways and Means consideration of the bill on September 14, Democratic members objected to approving the bill without a revenue offset. Ways and Means Ranking Member Sander Levin (D-MI) continued that criticism on the House floor today, saying while the bill "addresses an issue that's worthy of being addressed," it should be paid for, especially at a time of disagreement in Congress over whether to offset the cost of urgent priorities.

A September 20 Statement of Administration Policy stated: "The Administration is committed to helping startups, boosting innovation, and growing the economy, and is willing to work with the Congress on fiscally responsible measures to achieve those goals. However, the Administration strongly opposes H.R. 5719 because it would increase the Federal deficit by $1 billion over the next ten years. Failing to pay for new tax cuts is fiscally irresponsible."

A nearly identical proposal, sponsored by Senators Mark Warner (D-VA) and Dean Heller (R-NV), was approved by the Senate Finance Committee yesterday as part of a collection of bipartisan, largely noncontroversial proposals to expand retirement savings and improve pension and retirement plans.

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