S. 2505 - Worker Dividend Act of 2018

115TH CONGRESS
2D SESSION

S. 2505

To amend the Internal Revenue Code of 1986 to ensure that workers and communities that are responsible for record corporate profits benefit from the wealth that those workers and communities help to create, and for other purposes.

IN THE SENATE OF THE UNITED STATES

MARCH 6, 2018

Mr. BOOKER (for himself and Mr. CASEY) introduced the following bill;
which was read twice and referred to the Committee on Finance

A BILL

To amend the Internal Revenue Code of 1986 to ensure that workers and communities that are responsible for record corporate profits benefit from the wealth that those workers and communities help to create, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the "Worker Dividend Act of 2018".

SEC. 2. FAILURE OF EMPLOYER TO PAY WORKER DIVIDENDS.

(a) IN GENERAL. — Subtitle D of the Internal Revenue Code of 1986 is amended by inserting after chapter 36 the following new chapter:

"CHAPTER 37 — PROVISIONS RELATING TO WORKER DIVIDENDS

"Sec. 4501. Failure of employer to pay worker dividends.

"SEC. 4501. FAILURE OF EMPLOYER TO PAY WORKER DIVIDENDS.

"(a) GENERAL RULE. — If, for a taxable year in which a covered employer repurchases any securities of the employer on the open market, the covered employer fails to pay to its employees a worker dividend meeting the requirements of subsection (b), then there is hereby imposed on the covered employer a tax equal to the lesser of the amounts determined under subparagraphs (A) and (B) of subsection (b)(1).

"(b) WORKER DIVIDEND. — For purposes of this section —

"(1) IN GENERAL. — The term 'worker dividend' means a payment made by a covered employer to employees of the employer at locations in the United States, if the total of all such payments made during the taxable year is not less than the lesser of —

"(A) the amount paid by the employer to repurchase securities of the employer on the open market during the taxable year, and

"(B) 50 percent of the amount by which the earnings before interest, taxes, depreciation, and amortization of the employer during the taxable year in the United States exceed $250,000,000.

"(2) PAYMENTS TO BE IN ADDITION TO COMPENSATION. — Such term shall not include any payment unless such payment is in addition to, and (including by election of the employee) is not included in (except as provided in paragraph (5)) or substituted for, any cash or other compensation ordinarily paid to the employee by the employer.

"(3) PAYMENTS TO BE EQUAL. — Such term shall not include any payment unless the amount of the payment made to each employee of the employer in the United States is of an equal amount. Notwithstanding the preceding sentence, in the case of an employee employed at less than full time, the payment to such employee may be in a pro rata amount based on the hours worked by the employee per week.

"(4) TIMING OF PAYMENT. — Such term shall not include any payment which is not made within 60 days of the close of the taxable year to which it relates.

"(5) OPTION TO INCREASE COMPENSATION. — A covered employer may, by providing such documentation as the Secretary may require, elect to have the worker dividend paid to employees in the form of an increase in regular compensation. In the case of a covered employer making such election —

"(A) paragraph (4) shall not apply, and

"(B) the term 'worker dividend' includes only increases in compensation which are so documented and which are paid within 1 calendar year of the date the increase goes into effect.

"(c) COVERED EMPLOYER. — For purposes of this section, the term 'covered employer' means, for any taxable year, any entity the stock of which is publicly traded.

"(d) AGGREGATION RULE. — All persons treated as a single employer under subsection (a) or (b) of section 52 shall be treated as a single employer for purposes of determining whether an individual is an employee of a covered employer.

"(e) REGULATIONS. — The Secretary, in consultation with the Secretary of Labor, shall promulgate regulations or other guidance to ensure compliance with this section, including the determination of full time status and rules to prevent avoidance of the purposes of subsection (b)(2).

"(f) REPORTING. — With respect to any taxable year in which a covered employer repurchases any securities of the employer on the open market, not later than the due date for the return of tax for such taxable year such employer shall report to the Secretary and the Chairman of the Securities and Exchange Commission, in such manner as the Secretary shall determine, the amount of any worker dividend paid during such taxable year and any other information as the Secretary shall require.".

(b) CLERICAL AMENDMENT. — The table of chapters for subtitle D of the Internal Revenue Code of 1986 is amended by inserting after the item relating to chapter 36 the following new item:

"CHAPTER 37 — PROVISIONS RELATING TO WORKER DIVIDENDS".

(c) EFFECTIVE DATE. — The amendments made by this section shall apply to repurchases of employer securities in taxable years beginning after the date of the enactment of this Act.