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senate Bill S. 2505

Should Corporations Have to Pay Bonuses Equal to the Size of Their Share Buybacks?

Argument in favor

Corporations that have the profits to reward shareholders with share buybacks should be able to pay bonuses or raise wages for workers by an equal amount.

Rick 's Opinion
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03/29/2018
It is high time corporate America stop standing on the backs of their subordinate employees. Sharing the wealth of the profits that come mostly from the hard work and dedication of their employees have to go. American’s need to work, but having this mentality that upper management reaping all the financial benefits to this hard work that the working population does is hurting the economy!
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Justin's Opinion
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03/29/2018
Absolutely. The fat can’t get fat alone - at a higher rate
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Daniel's Opinion
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03/29/2018
Anything that gives regular workers a little more spending power and wealth (as opposed to just giving it all to the CEOs) is fine with me
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Argument opposed

Corporations buying back shares is just an example of financial markets working efficiently, Congress shouldn’t mandate those businesses pay bonuses too.

JTJ's Opinion
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03/29/2018
No, the government has no business telling companies how to do their business.
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Edward's Opinion
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03/29/2018
This is Government overreach into the private sector
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TuckerWantsLiberty's Opinion
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03/29/2018
No. "Should they?" No. This is ridiculous. Employees are not shareholders. Their "share" of the revenues comes in the form of a paycheck. Only shareholders are shareholders and have a right to the company's profits.
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bill Progress


  • Not enacted
    The President has not signed this bill
  • The house has not voted
  • The senate has not voted
      senate Committees
      Committee on Finance
    IntroducedMarch 6th, 2018

What is Senate Bill S. 2505?

This bill — the Worker Dividend Act — would require corporations which use profits for stock buybacks to pay out a commensurate amount in bonuses to all of its employees. Bonuses would have to be equal in size for all employees (prorated for less than full-time workers), and paid out within 60 days of the end of the tax year unless the corporation chooses to increase regular compensation by that amount for one year. If a corporation fails to make such payments to employees, it would be required to pay a tax equal to the lesser of the amount of buybacks, or 50 percent of profits beyond $250 million.

Impact

Corporations which buyback shares, along with their workers and investors; and the federal government.

Cost of Senate Bill S. 2505

A CBO cost estimate is unavailable.

More Information

In-Depth: Sponsoring Sen. Cory Booker (D-NJ) introduced this bill to require corporations to pay out bonuses equal in value to any share buybacks it undertakes:

“Today, a culture of ‘short-termism’ pervades industry and financial markets, as companies prioritize short-run returns to investors and executives over investments in workers, like higher wages and expanded training, which pay off over the long run… Indicative of this trend is the massive wave of stock buybacks, in which companies are using their profits to benefit wealthy investors, as opposed to reinvesting those profits in their workers, in the form of raises. Our bill would mitigate this disturbing trend by ensuring that if a company has the profits to reward its shareholders, it must also reward the very people that help the company prosper — its workers.”

A column in the Financial Times’ Alphaville took issue with this bill, raising questions about whether low-income workers would benefit if they’re employed as contractors by subsidiaries rather than directly by parent corporations. It also pointed to conflicting research on the efficacy of share buybacks and suggested an alternative to the bill:

“In any event, government policies meant to impose high standards for corporate governance would limit the shareholder-value-destroying types of buybacks and encourage the types that create value. One place to start could be corporate boards — while they are required to sign off on the specific dividend amounts and schedules, the same standards do not hold for share buybacks. Subjecting buybacks to the same amount of board scrutiny as dividends may not sound as exciting as Booker’s “Worker Dividend Act”, but it sure does sound like a common-sense approach.”

This legislation has the support of one cosponsor, Sen. Bob Casey (D-PA).


Media:

Summary by Eric Revell

(Photo Credit: Doloves / iStock)

AKA

Worker Dividend Act of 2018

Official Title

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.

    It is high time corporate America stop standing on the backs of their subordinate employees. Sharing the wealth of the profits that come mostly from the hard work and dedication of their employees have to go. American’s need to work, but having this mentality that upper management reaping all the financial benefits to this hard work that the working population does is hurting the economy!
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    Government should stay out of this.
    Like (67)
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    No, the government has no business telling companies how to do their business.
    Like (51)
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    Absolutely. The fat can’t get fat alone - at a higher rate
    Like (50)
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    Anything that gives regular workers a little more spending power and wealth (as opposed to just giving it all to the CEOs) is fine with me
    Like (39)
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    This is Government overreach into the private sector
    Like (39)
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    No. "Should they?" No. This is ridiculous. Employees are not shareholders. Their "share" of the revenues comes in the form of a paycheck. Only shareholders are shareholders and have a right to the company's profits.
    Like (38)
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    The employees are not shareholders & do not share the financial risks associated with investing. If they are shareholders then they would get the money.
    Like (32)
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    Yes - wasn't the justification for the "tax cut" that it would give companies money to hire more workers and raise wages?
    Like (24)
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    If you haven’t owned a business, started that business with money from your own pocket, struggled through the early years of striving to break even, then you should have no opinion on this topic. Business owners DO NOT need ANYONE demanding how their profits are dispersed. End of Story.
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    A Democrat Corey Booker sponsored legislation; need I say more? Although I believe many corporations are greedy as hell, their role responsibility is to their shareholders. It is not the federal government’s responsibility to tell them where/how to use their funds. If Booker and his ilk had their way, they’d drive corporation back overseas, right at a time when we are beginning to see the dividends of having a businessman in the WH vs a politician; most of whom have spent their entire careers in politics, never having created a job or met a payroll. Go down this path, and it may look like the push for “Fight for $15,” which has shown to create more technology to replace the worker. Dems should learn about the Laws of Unintended Consequences!
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    Government should not tell companies what to do with their money
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    If corporations can afford to buy back shares & give shareholders part of the profit, they can also give “profit incentives” to workers who created the profit.
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    I’m so tired of seeing workers get shafted by their employers who use the workers to make great money for everyone BUT the worker.
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    Corporations need to do a better job of investing in their non-management employees. If these monies are directed at those employees and not executives it would be a good start.
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    Should we desire for a middle class to continue to exist we can’t have the top1% continue to carry more than 80% of the wealth in his country.
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    What happens to share of company value when investors dump stock for lack of return and company collapses or gets taken over or bought? You think workers keep their jobs or are laid off? Once again taking economic actions in an assumed vacuum and expecting there to be no unintended consequences. I expect no less from the lightweight Senator from (my) state of New Jersey.
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    No, that’s a ridiculous idea. Stock buy backs are in reality payoff of a form of credit. This would advocate to pay workers before debt.
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    We don’t need more government overreach! Stop regulating companies to death!
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    If corporations use their huge tax giveaways to buy back stock and reward investors. If the monies for those buybacks comes from a huge tax giveaway. Then perhaps the workers who make those businesses function should share in the rewards. And, if the tax giveaways were mandated by the government, then the workers’ raises/bonuses should also be mandated.
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