Bill Introduced to Encourage Broad-Based Stock Options

Rep. John Boehner (R-OH) has introduced legislation (HR 3462) that would combine the personal tax treatment of incentive stock option plans with the corporate tax treatment of nonqualified stock options for companies that provide options to at least 50% of their non-highly compensated full-time workers who have worked for the company for at least two years. Provided employees under the plan hold their shares at least two years from grant and one year from exercise, they would pay no tax until the shares are sold and then pay only capital gains tax on sale. Companies, however, could deduct the spread on the options from their taxable income.

Boehner is the chair of the House Education Committee Subcommittee on Employer-Employee Relations. While the bill is not likely to pass in its current version any time soon, its introduction speaks of a growing interest in Congress to encourage a broader application of options for non-management employees.