BENEFITS BYTE

July 13, 2001
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Patients' Bill of Rights Update: Council Releases Paper Criticizing S. 1052

On July 13, the Council released a paper detailing the flaws that still exist in the Senate-passed Kennedy-McCain version of the "Patients' Bill of Rights" (S. 1052). This paper is currently available on the Council Web site. Please feel free to use this as a resource in your lobbying efforts.

Media sources are reporting that the House still intends to debate patients' rights legislation the week of July 16. There is now speculation that the legislation will be considered in three separate pieces, consisting of a "patient protections" component, an "access measures" component, and a "liability" component.

On July 12, House Education and the Workforce Chairman John Boehner (R-OH) unveiled an Employment Policy Foundation report claiming that the liability provisions of the Senate-passed bill would increase costs to the American healthcare system by up to $16.3 billion a year and add up to 9 million more people to the ranks of the uninsured. According to the same study, the House leadership-backed alternative, H.R. 2315, which carries less strict liability provisions, would increase costs by only $4.2 billion per year and only increase the uninsured to 2 million.

The Council will keep you informed of any other congressional developments as the House prepares for debate. For more information, contact Maria Ghazal, Council director, health policy, at (202) 289-6700.

Stock Legislation Update

Congress lately has shown interest in equity ownership incentives, as evidenced by the introduction of a number of pieces of legislation. Below is a summary of bills recently introduced.

  • H.R. 1062, the Employee Participation Incentive Act of 2001 — Rep. Rob Andrews (D-NJ) introduced H.R. 1062 on March 15. The bill provides for two incentives for the encouragement of equity ownership by employees. First, the bill would set a maximum corporate income tax rate of 30 percent if (a) the 'employee voting percentage' is at least 20 percent and (b) the 'employee value percentage' is at least 20 percent. 'Employee voting percentage' is the percentage of total voting power of the stock of a corporation held directly by employees. 'Employee value percentage' refers to the total value of stock held directly by employees. In calculating these percentages, highly compensated employees and 5 percent shareholders are excluded. The second incentive offered by H.R. 1062 would exclude compensation paid in company stock from an employee's gross income if the company offers such stock compensation to 95 percent of the workforce and 95 percent of the value of the stock is offered to the employees whose wages are among the bottom 75 percent of employees ranked on the basis of such wages.

  • H.R. 1487, Repeal of Alternative Minimum Tax Treatment for Incentive Stock Options — This bill, introduced by Rep. Zoe Lofgren (D-CA) on April 4, repeals the alternative minimum tax (AMT) treatment of incentive stock options (ISOs) under Internal Revenue Code (Code) section 56. Currently, the exercise of ISOs results in income for AMT purposes even though the gain from exercise is not includible in ordinary income.

  • H.R. 2383, Repeal of the AMT on ISO Exercise and Expansion of Code Section 1202 Treatment — On June 28, Rep. Jennifer Dunn (R-WA) introduced H.R. 2383, which, in addition to expanding the Code section 1202 exclusion from gross income of the gain from the sale or exchange of qualified small business stock, would amend Code section 56 in order to repeal the application of the AMT to the exercise of ISOs.

  • H.R. 2416, the Employee Ownership Act of 2001 — Introduced by Rep. Dana Rohrabacher (R-CA) on June 28, H.R. 2416 creates new incentives for employee ownership of corporations by excluding 'employee-owned and employee-controlled corporations' from the corporate income tax under Code section 11. An employee-owned and employee-controlled corporation is one in which more than 50 percent of the voting stock is held in trust for the benefit of employees and at least 25 employees as well as 90 percent of all employees are participants and beneficiaries of the trust. Moreover, H.R. 2416 provides favorable tax treatment, under certain conditions, for employees from the sale or transfer of stock from the trust.

  • S. 1142, the Entrepreneurs Risk Incentive Act of 2001 — Sen. Joe Lieberman (D-CT) introduced S. 1142 on June 29. The bill would amend Code section 56 in order to repeal the application of the AMT on the exercise of ISOs.

We are particularly pleased to see the growing congressional interest in repealing the application of the alternative minimum tax to incentive stock options, a key recommendation in the Council's recent white paper on employer-sponsored stock ownership plans. If you have any questions or need additional information, contact John C. Scott, Council director, retirement policy, at (202) 289-6700.