Title: Worker Owned Wealth Act
Policy area: Taxation

Summary:
Worker Owned Wealth Act
This bill establishes a loan program and tax incentives to assist employee stock ownership plans (ESOPs).
The Department of the Treasury must establish in each field office an Employer Ownership Revolving Loan Fund to make: (1) low-interest loans to business owners seeking to establish employee ownership in the business, and (2) loan guarantees to private lenders who make loans to ESOPs.
The bill amends the Internal Revenue Code to exclude from gross income a limited amount of the interest received from loans to a corporation or an ESOP to acquire or transfer employer securities for an ESOP that meets specified requirements.
The bill also imposes a 10% tax on a disposition of certain employer securities by an ESOP: (1) within three years of the acquisition of the securities, subject to specified conditions; or (2) if the securities or the proceeds from the disposition have not been allocated to participants or their beneficiaries.
The bill modifies the limitation on the deductibility of executive compensation of publicly held corporations to: (1) require a corporation that uses the performance-based compensation exception to be at least 5% employee-owned under an employee stock program, and (2) modify the definition of "publicly held corporation."
The bill establishes within the National Economic Council the Office of Employee Ownership and Worker Empowerment to provide educational and technical assistance, raise awareness, and report to Congress regarding employee ownership in companies.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 1788 Introduced in Senate (IS)]

<DOC>






115th CONGRESS
  1st Session
                                S. 1788

  To encourage companies to expand employee ownership, and for other 
                               purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           September 11, 2017

Ms. Baldwin (for herself and Mrs. Gillibrand) introduced the following 
  bill; which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
  To encourage companies to expand employee ownership, 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 Owned Wealth Act''.

SEC. 2. DEFINITION.

    In this Act, the term ``ESOP'' means an employee stock ownership 
plan, as defined in section 4975(e)(7) of the Internal Revenue Code of 
1986.

SEC. 3. EMPLOYEE OWNERSHIP REVOLVING LOAN FUNDS.

    (a) In General.--The Secretary of the Treasury shall establish in 
each field office in the Department of the Treasury an Employee 
Ownership Revolving Loan Fund that makes--
            (1) low-interest loans to business owners seeking to 
        establish employee ownership in the business; and
            (2) loan guarantees to private lenders who make loans to 
        ESOPs.
    (b) Staff.--
            (1) In general.--The Secretary of the Treasury may, without 
        regard to the civil service laws (including regulations), 
        appoint and terminate such personnel as may be necessary to 
        enable the Secretary to carry out this section.
            (2) Compensation.--The Secretary of the Treasury may fix 
        the compensation of personnel without regard to chapter 51 and 
        subchapter III of chapter 53 of title 5, United States Code, 
        relating to classification of positions and General Schedule 
        pay rates, except that the rate of pay for personnel may not 
        exceed the rate payable for level V of the Executive Schedule 
        under section 5316 of that title.
    (c) Authorization of Appropriations.--There is authorized to be 
appropriated $1,000,000,000 to carry out this section.

SEC. 4. EXCLUSION OF INTEREST ON LOANS USED TO ACQUIRE EMPLOYER 
              SECURITIES FOR EMPLOYEE STOCK OWNERSHIP PLANS.

    (a) In General.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 is amended by inserting after section 132 
the following new section:

``SEC. 133. INTEREST ON CERTAIN LOANS USED TO ACQUIRE EMPLOYER 
              SECURITIES.

    ``(a) Allowance of Exclusion.--
            ``(1) In general.--Except as provided in paragraph (2), 
        gross income does not include the applicable percentage of the 
        interest received by--
                    ``(A) a bank (within the meaning of section 581),
                    ``(B) an insurance company to which subchapter L 
                applies,
                    ``(C) a corporation actively engaged in the 
                business of lending money, or
                    ``(D) a regulated investment company (as defined in 
                section 851),
        with respect to a securities acquisition loan.
            ``(2) Annual limitation.--The aggregate amount of interest 
        which may be excluded by a taxpayer under paragraph (1) for any 
        taxable year shall not exceed $20,000,000.
            ``(3) Applicable percentage.--For purposes of this 
        section--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the applicable percentage of a 
                taxpayer with respect to any securities acquisition 
                loan is 50 percent.
                    ``(B) Lower percentages for larger financial 
                institutions.--If, for any taxable year in which a 
                taxpayer enters into a securities acquisition loan--
                            ``(i) the average adjusted bases of all 
                        assets of the taxpayer are equal to or greater 
                        than $2,000,000,000 but less than or equal to 
                        $10,000,000,000, the taxpayer's applicable 
                        percentage with respect to interest received by 
                        the taxpayer on such loan (including any 
                        refinancing of such loan treated as a 
                        securities acquisition loan) for such taxable 
                        year and any succeeding taxable year shall be 
                        25 percent, and
                            ``(ii) the average adjusted bases of all 
                        assets of the taxpayer are greater than 
                        $10,000,000,000, the taxpayer's applicable 
                        percentage with respect to interest received by 
                        the taxpayer on such loan (including any 
                        refinancing of such loan treated as a 
                        securities acquisition loan) for such taxable 
                        year and any succeeding taxable year shall be 
                        10 percent.
            ``(4) Controlled group of corporations.--All members of a 
        controlled group of corporations (as defined in section 
        409(l)(4)) shall be treated as 1 taxpayer for purposes of 
        applying paragraphs (2) and (3).
    ``(b) Securities Acquisition Loan.--
            ``(1) In general.--For purposes of this section, the term 
        `securities acquisition loan' means--
                    ``(A) any loan to a corporation or to an employee 
                stock ownership plan to the extent that the proceeds 
                are used to acquire employer securities for the plan, 
                or
                    ``(B) any loan to a corporation to the extent that, 
                within 30 days, employer securities are transferred to 
                the plan in an amount equal to the proceeds of such 
                loan and such securities are allocable to accounts of 
                plan participants within 1 year of the date of such 
                loan.
        For purposes of this paragraph, the term `employer securities' 
        has the meaning given such term by section 409(l). The term 
        `securities acquisition loan' shall not include a loan with a 
        term greater than 15 years, except that in the case of a 
        securities acquisition loan which is a refinancing loan 
        described in paragraph (5), such term may not extend beyond the 
        last day of the original securities acquisition loan which such 
        loan is refinancing.
            ``(2) Loans between related persons.--The term `securities 
        acquisition loan' shall not include--
                    ``(A) any loan made between corporations which are 
                members of the same controlled group of corporations, 
                or
                    ``(B) any loan made between an employee stock 
                ownership plan and any person that is--
                            ``(i) the employer of any employees who are 
                        covered by the plan, or
                            ``(ii) a member of a controlled group of 
                        corporations which includes such employer.
                For purposes of this paragraph, subparagraphs (A) and 
                (B) shall not apply to any loan which, but for such 
                subparagraphs, would be a securities acquisition loan 
                if such loan was not originated by the employer of any 
                employees who are covered by the plan or by any member 
                of the controlled group of corporations which includes 
                such employer, except that this section shall not apply 
                to any interest received on such loan during such time 
                as such loan is held by such employer (or any member of 
                such controlled group).
            ``(3) Terms applicable to certain securities acquisition 
        loans.--A loan to a corporation shall not fail to be treated as 
        a securities acquisition loan merely because the proceeds of 
        such loan are lent to an employee stock ownership plan 
        sponsored by such corporation (or by any member of the 
        controlled group of corporations which includes such 
        corporation) if such loan includes--
                    ``(A) repayment terms which are substantially 
                similar to the terms of the loan of such corporation 
                from a lender described in subsection (a), or
                    ``(B) repayment terms providing for more rapid 
                repayment of principal or interest on such loan, but 
                only if allocations under the plan attributable to such 
                repayment do not discriminate in favor of highly 
                compensated employees (within the meaning of section 
                414(q)).
            ``(4) Controlled group of corporations.--For purposes of 
        this subsection, the term `controlled group of corporations' 
        has the meaning given such term by section 409(l)(4).
            ``(5) Treatment of refinancings.--The term `securities 
        acquisition loan' shall include any loan which--
                    ``(A) is (or is part of a series of loans) used to 
                refinance a loan described in subparagraph (A) or (B) 
                of paragraph (1), and
                    ``(B) meets the requirements of paragraphs (2) and 
                (3).
            ``(6) Plan requirements.--
                    ``(A) In general.--A loan shall not be treated as a 
                securities acquisition loan for purposes of this 
                section unless, immediately after the acquisition or 
                transfer referred to in subparagraph (A) or (B) of 
                paragraph (1), respectively, the employee stock 
                ownership plan meets the requirements of subparagraphs 
                (B) and (C).
                    ``(B) Plan must hold more than 5 percent of stock 
                after acquisition or transfer.--An employee stock 
                ownership plan meets the requirements of this 
                subparagraph if the plan owns more than 5 percent of--
                            ``(i) each class of outstanding stock of 
                        the corporation issuing the employer 
                        securities, or
                            ``(ii) the total value of all outstanding 
                        stock of the corporation.
                    ``(C) Plan must cover at least 50 percent of 
                nonhighly compensated employees.--
                            ``(i) In general.--An employee stock 
                        ownership plan meets the requirements of this 
                        subparagraph if at least 50 percent of the 
                        employees of each employer maintaining the plan 
                        who are not highly compensated employees (as 
                        defined in section 414(q)) are participants in 
                        the plan.
                            ``(ii) Certain employees may be excluded.--
                        For purposes of clause (i), an employer may 
                        elect to exclude under the plan employees--
                                    ``(I) who have not attained the age 
                                of 21 before the close of a plan year,
                                    ``(II) who have less than 1 year of 
                                service with the employer as of any day 
                                during the plan year,
                                    ``(III) who are covered under an 
                                agreement which the Secretary of Labor 
                                finds to be a collective bargaining 
                                agreement if there is evidence that the 
                                benefits covered under the employee 
                                stock ownership plan were the subject 
                                of good faith bargaining between 
                                employee representatives and the 
                                employer, or
                                    ``(IV) who are described in section 
                                410(b)(3)(C) (relating to nonresident 
                                aliens working outside the United 
                                States).
                    ``(D) Failure to meet requirements.--
                            ``(i) In general.--Subsection (a) shall not 
                        apply to any interest received with respect to 
                        a securities acquisition loan which is 
                        allocable to any period during which the 
                        employee stock ownership plan does not meet the 
                        requirements of subparagraphs (B) and (C).
                            ``(ii) Exception.--To the extent provided 
                        by the Secretary, clause (i) shall not apply to 
                        any period if, within 90 days of the first date 
                        on which the failure occurred (or such longer 
                        period not in excess of 180 days as the 
                        Secretary may prescribe), the plan takes such 
                        actions as are required to meet the 
                        requirements of subparagraphs (B) and (C).
                    ``(E) Stock.--For purposes of subparagraph (B)--
                            ``(i) In general.--The term `stock' means 
                        stock other than stock described in section 
                        1504(a)(4).
                            ``(ii) Treatment of certain rights.--The 
                        Secretary may provide that warrants, options, 
                        contracts to acquire stock, convertible debt 
                        interests and other similar interests be 
                        treated as stock for 1 or more purposes under 
                        subparagraph (B).
                    ``(F) Aggregation rule.--For purposes of 
                determining whether the requirements of subparagraph 
                (B) are met, an employee stock ownership plan shall be 
                treated as owning stock in the corporation issuing the 
                employer securities which is held by any other employee 
                stock ownership plan which is maintained--
                            ``(i) the employer maintaining the plan, or
                            ``(ii) any member of a controlled group of 
                        corporations (within the meaning of section 
                        409(l)(4)) of which the employer described in 
                        clause (i) is a member.
            ``(7) Voting rights of employer securities.--A loan shall 
        not be treated as a securities acquisition loan for purposes of 
        this section unless--
                    ``(A) the employee stock ownership plan meets the 
                requirements of section 409(e)(2) with respect to all 
                employer securities acquired by, or transferred to, the 
                plan in connection with such loan (without regard to 
                whether or not the employer has a registration-type 
                class of securities), and
                    ``(B) no stock described in section 409(l)(3) is 
                acquired by, or transferred to, the plan in connection 
                with such loan unless--
                            ``(i) such stock has voting rights 
                        equivalent to the stock to which it may be 
                        converted, and
                            ``(ii) the requirements of subparagraph (A) 
                        are met with respect to such voting rights.
    ``(c) Employee Stock Ownership Plan.--
            ``(1) In general.--For purposes of this section, the term 
        `employee stock ownership plan' has the meaning given to such 
        term by section 4975(e)(7).
            ``(2) Eligible worker-owned cooperatives included.--For 
        purposes of this section and sections 4978B, 6042, and 7872, 
        such term shall also include an eligible worker-owned 
        cooperative (as defined in section 1042(c)).
    ``(d) Application With Section 483 and Original Issue Discount 
Rules.--In applying section 483 and subpart A of part V of subchapter P 
to any obligation to which this section applies, appropriate 
adjustments shall be made to the applicable Federal rate to take into 
account the exclusion under subsection (a).
    ``(e) Period to Which Interest Exclusion Applies.--
            ``(1) In general.--In the case of--
                    ``(A) an original securities acquisition loan, and
                    ``(B) any securities acquisition loan (or series of 
                such loans) used to refinance the original securities 
                acquisition loan,
        subsection (a) shall apply only to interest accruing during the 
        excludable period with respect to the original securities 
        acquisition loan.
            ``(2) Excludable period.--For purposes of this subsection, 
        the term `excludable period' means, with respect to any 
        original securities acquisition loan--
                    ``(A) In general.--The 7-year period beginning on 
                the date of such loan.
                    ``(B) Loans described in subsection (b)(1)(A).--If 
                the term of an original securities acquisition loan 
                described in subsection (b)(1)(A) is greater than 7 
                years, the term of such loan. This subparagraph shall 
                not apply to a loan described in subsection (b)(3)(B).
            ``(3) Original securities acquisition loan.--For the 
        purposes of this subsection, the term `original securities 
        acquisition loan' means a securities acquisition loan described 
        in subparagraph (A) or (B) of subsection (b)(1).''.
    (b) Conforming Amendments.--
            (1) Subparagraph (B) of section 291(e)(1) of the Internal 
        Revenue Code of 1986 is amended by redesignating clause (iv) as 
        clause (v) and by inserting after clause (iii) the following 
        new clause:
                            ``(iv) Special rules for obligations to 
                        which section 133 applies.--In the case of an 
                        obligation to which section 133 applies, 
                        interest on such obligation shall not be 
                        treated as exempt from taxation for purposes of 
                        this subparagraph.''.
            (2) Section 812 of such Code is amended by adding at the 
        end the following:
    ``(g) Treatment of Interest Partially Tax-Exempt Under Section 
133.--For purposes of this section and subsections (a) and (b) of 
section 807, the terms `gross investment income' and `tax-exempt 
interest' shall not include any interest received with respect to a 
securities acquisition loan (as defined in section 133(b)). Such 
interest shall not be included in life insurance gross income for 
purposes of subsection (b)(3).''.
            (3) Paragraph (5) of section 852(b) of such Code is amended 
        by adding at the end the following:
                    ``(C) Interest on certain loans used to acquire 
                employer securities.--For purposes of this section--
                            ``(i) the applicable percentage (as defined 
                        in section 133(a)(3)) of the amount of any loan 
                        held by a regulated investment company which 
                        qualifies as a securities acquisition loan (as 
                        defined in section 133) shall be treated as an 
                        obligation described in section 103(a), and
                            ``(ii) such applicable percentage of the 
                        interest received on such loan shall be treated 
                        as interest excludable from gross income under 
                        section 103.''.
            (4) Paragraph (2) of section 4978(b) of such Code is 
        amended by striking subparagraphs (A) and (B) and all that 
        follows and inserting:
                    ``(A) first, from section 133 securities (as 
                defined in section 4978B(e)(2)) acquired during the 3-
                year period ending on the date of such disposition, 
                beginning with the securities first so acquired,
                    ``(B) second, from section 133 securities (as so 
                defined) acquired before such 3-year period unless such 
                securities (or proceeds from the disposition) have been 
                allocated to accounts of participants or beneficiaries,
                    ``(C) third, from qualified securities to which 
                section 1042 applied acquired during the 3-year period 
                ending on the date of the disposition, beginning with 
                the securities first so acquired, and
                    ``(D) then from any other employer securities.
        If subsection (d) or section 4978B(d) applies to a disposition, 
        the disposition shall be treated as made from employer 
        securities in the opposite order of the preceding sentence.''.
            (5)(A) Chapter 43 of such Code is amended by inserting 
        before section 4979 the following new section:

``SEC. 4978B. TAX ON DISPOSITION OF EMPLOYER SECURITIES TO WHICH 
              SECTION 133 APPLIED.

    ``(a) Imposition of Tax.--In the case of an employee stock 
ownership plan which has acquired section 133 securities, there is 
hereby imposed a tax on each taxable event in an amount equal to the 
amount determined under subsection (b).
    ``(b) Amount of Tax.--
            ``(1) In general.--The amount of the tax imposed by 
        subsection (a) shall be equal to 10 percent of the amount 
        realized on the disposition to the extent allocable to section 
        133 securities under section 4978(b)(2).
            ``(2) Dispositions other than sales or exchanges.--For 
        purposes of paragraph (1), in the case of a disposition of 
        employer securities which is not a sale or exchange, the amount 
        realized on such disposition shall be the fair market value of 
        such securities at the time of disposition.
    ``(c) Taxable Event.--For purposes of this section, the term 
`taxable event' means any of the following dispositions:
            ``(1) Dispositions within 3 years.--Any disposition of any 
        employer securities by an employee stock ownership plan within 
        3 years after such plan acquired section 133 securities if--
                    ``(A) the total number of employer securities held 
                by such plan after such disposition is less than the 
                total number of employer securities held after such 
                acquisition, or
                    ``(B) except to the extent provided in regulations, 
                the value of employer securities held by such plan 
                after the disposition is 50 percent or less of the 
                total value of all employer securities as of the time 
                of the disposition.
        For purposes of subparagraph (B), the aggregation rule of 
        section 133(b)(6)(D) shall apply.
            ``(2) Stock disposed of before allocation.--Any disposition 
        of section 133 securities to which paragraph (1) does not apply 
        if--
                    ``(A) such disposition occurs before such 
                securities are allocated to accounts of participants or 
                their beneficiaries, and
                    ``(B) the proceeds from such disposition are not so 
                allocated.
    ``(d) Section Not To Apply to Certain Dispositions.--
            ``(1) In general.--This section shall not apply to any 
        disposition described in paragraph (1), (3), or (4) of section 
        4978(d).
            ``(2) Certain reorganizations.--For purposes of this 
        section, any exchange of section 133 securities for employer 
        securities of another corporation in any reorganization 
        described in section 368(a)(1) shall not be treated as a 
        disposition, but the employer securities received shall be 
        treated as section 133 securities and as having been held by 
        the plan during the period the securities which were exchanged 
        were held.
            ``(3) Forced disposition occurring by operation of state 
        law.--Any forced disposition of section 133 securities by an 
        employee stock ownership plan occurring by operation of a State 
        law shall not be treated as a disposition. This paragraph shall 
        only apply to securities which, at the time the securities were 
        acquired by the plan, were regularly traded on an established 
        securities market.
            ``(4) Coordination with other taxes.--This section shall 
        not apply to any disposition which is subject to tax under 
        section 4978 or section 4978A (as in effect on the day before 
        its repeal).
    ``(e) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Liability for payment of taxes.--The tax imposed by 
        this section shall be paid by the employer.
            ``(2) Section 133 securities.--The term `section 133 
        securities' means employer securities acquired by an employee 
        stock ownership plan in a transaction to which section 133 
        applied.
            ``(3) Disposition.--The term `disposition' includes any 
        distribution.
            ``(4) Ordering rules.--For ordering rules for dispositions 
        of employer securities, see section 4978(b)(2).''.
            (B) The table of sections for chapter 43 of such Code is 
        amended by inserting before the item relating to section 4979 
        the following new item:

``Sec. 4978B. Tax on disposition of employer securities to which 
                            section 133 applied.''.
            (6) Subsection (e) of section 6047 of such Code is amended 
        by striking paragraphs (1) and (2) and inserting the following 
        new paragraphs:
            ``(1) any employer maintaining, or the plan administrator 
        (within the meaning of section 414(g)) of, an employee stock 
        ownership plan--
                    ``(A) which acquired stock in a transaction to 
                which section 133 applies, or
                    ``(B) which holds stock with respect to which 
                section 404(k) applies to dividends paid on such stock,
            ``(2) any person making or holding a loan to which section 
        133 applies, or
            ``(3) both such employer or plan administrator and such 
        person,''.
            (7) Subsection (f) of section 7872 of such Code is amended 
        by adding at the end the following new paragraph:
            ``(12) Special rule for certain employer security loans.--
        This section shall not apply to any loan between a corporation 
        (or any member of the controlled group of corporations which 
        includes such corporation) and an employee stock ownership plan 
        described in section 4975(e)(7) to the extent that the interest 
        rate on such loan is equal to the interest rate paid on a 
        related securities acquisition loan (as described in section 
        133(b)) to such corporation.''.
            (8) The table of sections for part III of subchapter B of 
        chapter 1 of such Code is amended by inserting after the item 
        relating to section 132 the following new item:

``Sec. 133. Interest on certain loans used to acquire employer 
                            securities.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to original securities acquisition loans (as defined in section 
133(e)(3) of the Internal Revenue Code of 1986 (and loans refinancing 
such loans)) made after the date of the enactment of this Act.

SEC. 5. EMPLOYEE STOCK OWNERSHIP REQUIREMENTS FOR USE OF PERFORMANCE 
              EXCEPTION TO LIMITATION OF DEDUCTIBILITY OF EXECUTIVE 
              COMPENSATION; EXPANSION OF PUBLICLY HELD CORPORATION 
              DEFINITION.

    (a) Limitation on Use of Performance Exception.--
            (1) In general.--Section 162(m) of the Internal Revenue 
        Code of 1986 is amended by adding at the end the following new 
        paragraph:
            ``(7) Employee stock ownership requirements for use of 
        performance exception.--
                    ``(A) In general.--The exception under paragraph 
                (4)(C) shall not apply to any remuneration payable by a 
                publicly held corporation for any taxable year unless 
                the corporation has in effect at all times during the 
                year a qualified employee stock program.
                    ``(B) Qualified employee stock program.--For 
                purposes of this paragraph, the term `qualified 
                employee stock program' means, with respect to any 
                corporation, a program of the corporation under which--
                            ``(i) employees of the corporation other 
                        than highly compensated employees (within the 
                        meaning of section 414(q)) hold nonforfeitable 
                        rights to at least 5 percent of--
                                    ``(I) either each class of 
                                outstanding stock of the corporation 
                                issuing the employer securities or the 
                                total value of all outstanding stock of 
                                the corporation, and
                                    ``(II) the voting rights of the 
                                total outstanding voting shares of 
                                stock of the corporation,
                            ``(ii) any stock (or any right with respect 
                        to such stock) taken into account with respect 
                        to an employee under clause (i) is provided to 
                        the employee as an employer contribution and at 
                        no cost to the employee, and
                            ``(iii) the providing of such stock or 
                        right by the corporation is not in lieu of any 
                        other remuneration payable to such employee.
                If a program includes the granting at no cost to 
                employees of stock options under which employees may 
                purchase stock through the exercise of the options, the 
                cost to the employee of such purchase shall not be 
                taken into account in determining whether the program 
                meets the requirements of clause (ii).
                    ``(C) Failure to retain minimum stock interest.--
                            ``(i) In general.--Notwithstanding 
                        subparagraph (A), paragraph (4)(C) shall not 
                        apply to any remuneration payable by a 
                        corporation with a qualified employee stock 
                        program during any period employees do not own 
                        stock meeting the requirements of subparagraph 
                        (B)(i).
                            ``(ii) Exception.--To the extent provided 
                        by the Secretary, clause (i) shall not apply to 
                        any period if, within 90 days of the first date 
                        on which the failure occurred (or such longer 
                        period not in excess of 180 days as the 
                        Secretary may prescribe), the employees are 
                        given stock which results in the program 
                        meeting the requirements of subparagraph 
                        (B)(i).
                    ``(D) Stock.--For purposes of this paragraph--
                            ``(i) In general.--The term `stock' means 
                        stock other than stock described in section 
                        1504(a)(4).
                            ``(ii) Treatment of certain rights.--The 
                        Secretary may provide that warrants, options, 
                        contracts to acquire stock, convertible debt 
                        interests and other similar interests be 
                        treated as stock for 1 or more purposes under 
                        subparagraph (A).
                    ``(E) Aggregation rule.--For purposes of 
                determining whether the stock ownership requirements of 
                subparagraph (B)(i) are met, a controlled group of 
                corporations (within the meaning of section 409(l)(4)) 
                may elect to treat all members of the group as 1 
                corporation.
                    ``(F) Exception for existing binding contracts.--
                This paragraph shall not apply to any remuneration 
                payable under a written binding contract which was in 
                effect on April 1, 2017, and which was not modified 
                thereafter in any material respect before such 
                remuneration is paid.''.
            (2) Conforming amendment.--Subparagraph (C) of section 
        162(m)(4) of such Code is amended by striking ``The term'' and 
        inserting ``Subject to paragraph (7), the term''.
    (b) Definition of Publicly Held Corporation.--Paragraph (2) of 
section 162(m) is amended to read as follows:
            ``(2) Publicly held corporation.--For purposes of this 
        subsection, the term `publicly held corporation' means any 
        corporation which--
                    ``(A) qualifies as an issuer the securities of 
                which are registered under section 12 of the Securities 
                Exchange Act of 1934, or
                    ``(B) is required to file reports under section 
                15(d) of such Act.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 6. OFFICE OF EMPLOYEE OWNERSHIP AND WORKER EMPOWERMENT.

    (a) Establishment.--There is established within the National 
Economic Council the Office of Employee Ownership and Worker 
Empowerment.
    (b) Duties.--The Office of Employee Ownership and Worker 
Empowerment established under subsection (a) shall--
            (1) provide educational and technical assistance at no cost 
        to small businesses, as defined by the Administrator of the 
        Small Business Administration, that are attempting to establish 
        employee ownership;
            (2) raise awareness of profit sharing to companies and 
        employees, including ESOPs; and
            (3) not later than 180 days after the date of enactment of 
        this Act, submit to Congress a report on any barriers to 
        employee ownership in companies.
    (c) Staff.--
            (1) In general.--The Director of the National Economic 
        Council may, without regard to the civil service laws 
        (including regulations), appoint and terminate such personnel 
        as may be necessary to enable the Office of Employee Ownership 
        and Worker Empowerment to carry out this section.
            (2) Compensation.--The Director of the National Economic 
        Council may fix the compensation of personnel without regard to 
        chapter 51 and subchapter III of chapter 53 of title 5, United 
        States Code, relating to classification of positions and 
        General Schedule pay rates, except that the rate of pay for 
        personnel may not exceed the rate payable for level V of the 
        Executive Schedule under section 5316 of that title.
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