EMPOWERING EMPLOYEES THROUGH STOCK OWNERSHIP ACT
(House of Representatives - September 22, 2016)

Text available as:

Formatting necessary for an accurate reading of this text may be shown by tags (e.g., <DELETED> or <BOLD>) or may be missing from this TXT display. For complete and accurate display of this text, see the PDF.

        

[Pages H5822-H5830]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




            EMPOWERING EMPLOYEES THROUGH STOCK OWNERSHIP ACT

  Mr. BRADY of Texas. Mr. Speaker, pursuant to House Resolution 875, I 
call up the bill (H.R. 5719) to amend the Internal Revenue Code of 1986 
to modify the tax treatment of certain equity grants, and ask for its 
immediate consideration.
  The Clerk read the title of the bill.
  The SPEAKER pro tempore. Pursuant to House Resolution 875, the 
amendment in the nature of a substitute recommended by the Committee on 
Ways and Means, printed in the bill, is adopted, and the bill, as 
amended, is considered read.
  The text of the bill, as amended, is as follows:

                               H.R. 5719

       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 ``Empowering Employees through 
     Stock Ownership Act''.

     SEC. 2. TREATMENT OF QUALIFIED EQUITY GRANTS.

       (a) In General.--
       (1) Election to defer income.--Section 83 of the Internal 
     Revenue Code of 1986 is amended by adding at the end the 
     following new subsection:
       ``(i) Qualified Equity Grants.--
       ``(1) In general.--For purposes of this subtitle, if 
     qualified stock is transferred to a qualified employee who 
     makes an election with respect to such stock under this 
     subsection--
       ``(A) except as provided in subparagraph (B), no amount 
     shall be included in income under subsection (a) for the 
     first taxable year in which

[[Page H5823]]

     the rights of the employee in such stock are transferable or 
     are not subject to a substantial risk of forfeiture, 
     whichever is applicable, and
       ``(B) an amount equal to the amount which would be included 
     in income of the employee under subsection (a) (determined 
     without regard to this subsection) shall be included in 
     income for the taxable year of the employee which includes 
     the earliest of--
       ``(i) the first date such qualified stock becomes 
     transferable (including transferable to the employer),
       ``(ii) the date the employee first becomes an excluded 
     employee,
       ``(iii) the first date on which any stock of the 
     corporation which issued the qualified stock becomes readily 
     tradable on an established securities market (as determined 
     by the Secretary, but not including any market unless such 
     market is recognized as an established securities market by 
     the Secretary for purposes of a provision of this title other 
     than this subsection),
       ``(iv) the date that is 7 years after the first date the 
     rights of the employee in such stock are transferable or are 
     not subject to a substantial risk of forfeiture, whichever 
     occurs earlier, or
       ``(v) the date on which the employee revokes (at such time 
     and in such manner as the Secretary may provide) the election 
     under this subsection with respect to such stock.
       ``(2) Qualified stock.--
       ``(A) In general.--For purposes of this subsection, the 
     term `qualified stock' means, with respect to any qualified 
     employee, any stock in a corporation which is the employer of 
     such employee, if--
       ``(i) such stock is received--

       ``(I) in connection with the exercise of an option, or
       ``(II) in settlement of a restricted stock unit, and

       ``(ii) such option or restricted stock unit was provided by 
     the corporation--

       ``(I) in connection with the performance of services as an 
     employee, and
       ``(II) during a calendar year in which such corporation was 
     an eligible corporation.

       ``(B) Limitation.--The term `qualified stock' shall not 
     include any stock if the employee may sell such stock to, or 
     otherwise receive cash in lieu of stock from, the corporation 
     at the time that the rights of the employee in such stock 
     first become transferable or not subject to a substantial 
     risk of forfeiture.
       ``(C) Eligible corporation.--For purposes of subparagraph 
     (A)(ii)(II)--
       ``(i) In general.--The term `eligible corporation' means, 
     with respect to any calendar year, any corporation if--

       ``(I) no stock of such corporation (or any predecessor of 
     such corporation) is readily tradable on an established 
     securities market (as determined under paragraph (1)(B)(iii)) 
     during any preceding calendar year, and
       ``(II) such corporation has a written plan under which, in 
     such calendar year, not less than 80 percent of all employees 
     who provide services to such corporation in the United States 
     (or any possession of the United States) are granted stock 
     options, or restricted stock units, with the same rights and 
     privileges to receive qualified stock.

       ``(ii) Same rights and privileges.--For purposes of clause 
     (i)(II)--

       ``(I) except as provided in subclauses (II) and (III), the 
     determination of rights and privileges with respect to stock 
     shall be determined in a similar manner as provided under 
     section 423(b)(5),
       ``(II) employees shall not fail to be treated as having the 
     same rights and privileges to receive qualified stock solely 
     because the number of shares available to all employees is 
     not equal in amount, so long as the number of shares 
     available to each employee is more than a de minimis amount, 
     and
       ``(III) rights and privileges with respect to the exercise 
     of an option shall not be treated as the same as rights and 
     privileges with respect to the settlement of a restricted 
     stock unit.

       ``(iii) Employee.--For purposes of clause (i)(II), the term 
     `employee' shall not include any employee described in 
     section 4980E(d)(4) or any excluded employee.
       ``(iv) Special rule for calendar years before 2017.--In the 
     case of any calendar year beginning before January 1, 2017, 
     clause (i)(II) shall be applied without regard to whether the 
     rights and privileges with respect to the qualified stock are 
     the same.
       ``(3) Qualified employee; excluded employee.--For purposes 
     of this subsection--
       ``(A) In general.--The term `qualified employee' means any 
     individual who--
       ``(i) is not an excluded employee, and
       ``(ii) agrees in the election made under this subsection to 
     meet such requirements as determined by the Secretary to be 
     necessary to ensure that the withholding requirements of the 
     corporation under chapter 24 with respect to the qualified 
     stock are met.
       ``(B) Excluded employee.--The term `excluded employee' 
     means, with respect to any corporation, any individual--
       ``(i) who was a 1-percent owner (within the meaning of 
     section 416(i)(1)(B)(ii)) at any time during the 10 preceding 
     calendar years,
       ``(ii) who is or has been at any prior time--

       ``(I) the chief executive officer of such corporation or an 
     individual acting in such a capacity, or
       ``(II) the chief financial officer of such corporation or 
     an individual acting in such a capacity,

       ``(iii) who bears a relationship described in section 
     318(a)(1) to any individual described in subclause (I) or 
     (II) of clause (ii), or
       ``(iv) who has been for any of the 10 preceding taxable 
     years one of the 4 highest compensated officers of such 
     corporation determined with respect to each such taxable year 
     on the basis of the shareholder disclosure rules for 
     compensation under the Securities Exchange Act of 1934 (as if 
     such rules applied to such corporation).
       ``(4) Election.--
       ``(A) Time for making election.--An election with respect 
     to qualified stock shall be made under this subsection no 
     later than 30 days after the first time the rights of the 
     employee in such stock are transferable or are not subject to 
     a substantial risk of forfeiture, whichever occurs earlier, 
     and shall be made in a manner similar to the manner in which 
     an election is made under subsection (b).
       ``(B) Limitations.--No election may be made under this 
     section with respect to any qualified stock if--
       ``(i) the qualified employee has made an election under 
     subsection (b) with respect to such qualified stock,
       ``(ii) any stock of the corporation which issued the 
     qualified stock is readily tradable on an established 
     securities market (as determined under paragraph (1)(B)(iii)) 
     at any time before the election is made, or
       ``(iii) such corporation purchased any of its outstanding 
     stock in the calendar year preceding the calendar year which 
     includes the first time the rights of the employee in such 
     stock are transferable or are not subject to a substantial 
     risk of forfeiture, unless--

       ``(I) not less than 25 percent of the total dollar amount 
     of the stock so purchased is deferral stock, and
       ``(II) the determination of which individuals from whom 
     deferral stock is purchased is made on a reasonable basis.

       ``(C) Definitions and special rules related to limitation 
     on stock redemptions.--
       ``(i) Deferral stock.--For purposes of this paragraph, the 
     term `deferral stock' means stock with respect to which an 
     election is in effect under this subsection
       ``(ii) Deferral stock with respect to any individual not 
     taken into account if individual holds deferral stock with 
     longer deferral period.--Stock purchased by a corporation 
     from any individual shall not be treated as deferral stock 
     for purposes of clause (iii) if such individual (immediately 
     after such purchase) holds any deferral stock with respect to 
     which an election has been in effect under this subsection 
     for a longer period than the election with respect to the 
     stock so purchased.
       ``(iii) Purchase of all outstanding deferral stock.--The 
     requirements of subclauses (I) and (II) of subparagraph 
     (B)(iii) shall be treated as met if the stock so purchased 
     includes all of the corporation's outstanding deferral stock.
       ``(iv) Reporting.--Any corporation which has outstanding 
     deferral stock as of the beginning of any calendar year and 
     which purchases any of its outstanding stock during such 
     calendar year shall include on its return of tax for the 
     taxable year in which, or with which, such calendar year ends 
     the total dollar amount of its outstanding stock so purchased 
     during such calendar year and such other information as the 
     Secretary may require for purposes of administering this 
     paragraph.
       ``(5) Controlled groups.--For purposes of this subsection, 
     all corporations which are members of the same controlled 
     group of corporations (as defined in section 1563(a)) shall 
     be treated as one corporation.
       ``(6) Notice requirement.--Any corporation that transfers 
     qualified stock to a qualified employee shall, at the time 
     that (or a reasonable period before) an amount attributable 
     to such stock would (but for this subsection) first be 
     includible in the gross income of such employee--
       ``(A) certify to such employee that such stock is qualified 
     stock, and
       ``(B) notify such employee--
       ``(i) that the employee may elect to defer income on such 
     stock under this subsection, and
       ``(ii) that, if the employee makes such an election--

       ``(I) the amount of income recognized at the end of the 
     deferral period will be based on the value of the stock at 
     the time at which the rights of the employee in such stock 
     first become transferable or not subject to substantial risk 
     of forfeiture, notwithstanding whether the value of the stock 
     has declined during the deferral period,
       ``(II) the amount of such income recognized at the end of 
     the deferral period will be subject to withholding under 
     section 3401(i) at the rate determined under section 3402(t), 
     and
       ``(III) the responsibilities of the employee (as determined 
     by the Secretary under paragraph (3)(A)(ii)) with respect to 
     such withholding.''.

       (2) Deduction by employer.--Subsection (h) of section 83 of 
     the Internal Revenue Code of 1986 is amended by striking ``or 
     (d)(2)'' and inserting ``(d)(2), or (i)''.
       (b) Withholding.--
       (1) Time of withholding.--Section 3401 of the Internal 
     Revenue Code of 1986 is amended by adding at the end the 
     following new subsection:
       ``(i) Qualified Stock for Which an Election Is in Effect 
     Under Section 83(i).--For purposes of subsection (a), 
     qualified stock (as defined in section 83(i)) with respect to 
     which an election is made under section 83(i) shall be 
     treated as wages--
       ``(1) received on the earliest date described in section 
     83(i)(1)(B), and
       ``(2) in an amount equal to the amount included in income 
     under section 83 for the taxable year which includes such 
     date.''.
       (2) Amount of withholding.--Section 3402 of such Code is 
     amended by adding at the end the following new subsection:
       ``(t) Rate of Withholding for Certain Stock.--In the case 
     of any qualified stock (as defined in section 83(i)) with 
     respect to which an election is made under section 83(i)--
       ``(1) the rate of tax under subsection (a) shall not be 
     less than the maximum rate of tax in effect under section 1, 
     and
       ``(2) such stock shall be treated for purposes of section 
     3501(b) in the same manner as a non-cash fringe benefit.''.

[[Page H5824]]

       (c) Coordination With Other Deferred Compensation Rules.--
       (1) Election to apply deferral to statutory options.--
       (A) Incentive stock options.--Section 422(b) of the 
     Internal Revenue Code of 1986 is amended by adding at the end 
     the following: ``Such term shall not include any option if an 
     election is made under section 83(i) with respect to the 
     stock received in connection with the exercise of such 
     option.''.
       (B) Employee stock purchase plans.--Section 423(a) of such 
     Code is amended by adding at the end the following flush 
     sentence:
     ``The preceding sentence shall not apply to any share of 
     stock with respect to which an election is made under section 
     83(i).''.
       (2) Exclusion from definition of nonqualified deferred 
     compensation plan.--Subsection (d) of section 409A of the 
     Internal Revenue Code of 1986 is amended by adding at the end 
     the following new paragraph:
       ``(7) Treatment of qualified stock.--An arrangement under 
     which an employee may receive qualified stock (as defined in 
     section 83(i)(2)) shall not be treated as a nonqualified 
     deferred compensation plan solely because of an employee's 
     ability to defer recognition of income pursuant to an 
     election under section 83(i).''.
       (d) Information Reporting.--Section 6051(a) of the Internal 
     Revenue Code of 1986 is amended by striking ``and'' at the 
     end of paragraph (13), by striking the period at the end of 
     paragraph (14) and inserting a comma, and by inserting after 
     paragraph (14) the following new paragraphs:
       ``(15) the amount excludable from gross income under 
     subparagraph (A) of section 83(i)(1),
       ``(16) the amount includible in gross income under 
     subparagraph (B) of section 83(i)(1) with respect to an event 
     described in such subparagraph which occurs in such calendar 
     year, and
       ``(17) the aggregate amount of income which is being 
     deferred pursuant to elections under section 83(i), 
     determined as of the close of the calendar year.''.
       (e) Penalty for Failure of Employer To Provide Notice of 
     Tax Consequences.--Section 6652 of the Internal Revenue Code 
     of 1986 is amended by adding at the end the following new 
     subsection:
       ``(o) Failure to Provide Notice Under Section 83(i).--In 
     the case of each failure to provide a notice as required by 
     section 83(i)(6), at the time prescribed therefor, unless it 
     is shown that such failure is due to reasonable cause and not 
     to willful neglect, there shall be paid, on notice and demand 
     of the Secretary and in the same manner as tax, by the person 
     failing to provide such notice, an amount equal to $100 for 
     each such failure, but the total amount imposed on such 
     person for all such failures during any calendar year shall 
     not exceed $50,000.''.
       (f) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to stock 
     attributable to options exercised, or restricted stock units 
     settled, after December 31, 2016.
       (2) Requirement to provide notice.--The amendments made by 
     subsection (e) shall apply to failures after December 31, 
     2016.
       (g) Transition Rule.--Until such time as the Secretary (or 
     the Secretary's delegate) issue regulations or other guidance 
     for purposes of implementing the requirements of paragraph 
     (2)(C)(i)(II) of section 83(i) of the Internal Revenue Code 
     of 1986 (as added by this section), or the requirements of 
     paragraph (6) of such section, a corporation shall be treated 
     as being in compliance with such requirements (respectively) 
     if such corporation complies with a reasonable good faith 
     interpretation of such requirements.

  The SPEAKER pro tempore. The bill shall be debatable for 1 hour, 
equally divided and controlled by the chair and ranking minority member 
of the Committee on Ways and Means.
  The gentleman from Texas (Mr. Brady) and the gentleman from Michigan 
(Mr. Levin) each will control 30 minutes.
  The Chair recognizes the gentleman from Texas.


                             General Leave

  Mr. BRADY of Texas. Mr. Speaker, I ask unanimous consent that all 
Members have 5 legislative days to revise and extend their remarks and 
to include any extraneous material on H.R. 5719, currently under 
consideration.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Texas?
  There was no objection.
  Mr. BRADY of Texas. Mr. Speaker, I yield myself such time as I may 
consume.
  America's startup companies are a driving force behind our Nation's 
dynamic and prosperous free enterprise system. Over the past century, 
bold, innovative Americans have taken risks and started businesses of 
all sizes that deliver opportunity for millions of middle class 
families and workers.
  We should do everything we can to help America's startups attract the 
talented, hardworking employees they need to put their breakthrough 
ideas into motion. One of the best things we can do is ensure that our 
Tax Code supports American innovators. Our Tax Code must support--not 
suppress--innovation, entrepreneurship, and economic freedom.
  Today, I am honored to speak in support of legislation to do just 
that, Congressman Erik Paulsen's Empowering Employees through Stock 
Ownership Act.

                              {time}  1315

  This bipartisan, bicameral legislation takes action to keep America 
at the forefront of innovation by supporting startups and the workers 
who help them thrive.
  Right now many startup companies offer their workers stock options as 
a portion of their compensation. This helps startups attract top talent 
because they may not have the money to pay high salaries offered by 
larger businesses.
  The problem is, many startup workers can't exercise their stock 
options because they don't make enough to afford the associated tax 
payment. In addition, many startups are privately held, so there may 
not be an available market for these workers to sell some of the stocks 
so they can pay the tax.
  Ultimately, this means a portion of a startup worker's compensation--
sometimes a significant portion--can be essentially out of reach. So 
when a worker is considering whether to take a job at an exciting new 
small business, this issue can make the opportunity in that company a 
lot less attractive.
  Congressman Paulsen's commonsense legislation fixes the problem. It 
allows startup workers to defer the tax payment on their stock options 
for 7 years or until there is an ability to sell the stock, whichever 
comes first. Importantly, the bill includes provisions to ensure this 
tax relief can only be utilized by workers who need it. Those who hold 
large equity stakes in a startup or highly paid positions at the 
company won't be eligible.
  The bottom line is that by facilitating employee ownership, this bill 
will not only help startups attract talent, it will allow their workers 
to own a stake in that next breakthrough product or service.
  Congressman Paulsen is a long-time champion of employee ownership, 
free enterprise, and economic freedom--pillars of a strong American 
economy. I want to thank him for his leadership on this important 
bipartisan legislation, and I urge all my colleagues to join me in 
supporting its passage.
  The Empowering Employees through Stock Ownership Act is a smart, 
bipartisan solution to help ensure that American startups will continue 
to be a driving force behind American innovation, job growth, and 
prosperity.
  Mr. Speaker, I reserve the balance of my time, and I ask unanimous 
consent that the gentleman from Minnesota (Mr. Paulsen) be permitted to 
control the balance of my time.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Texas?
  There was no objection.
  Mr. LEVIN. Mr. Speaker, I yield myself such time as I may consume.
  This bill addresses an issue that is worthy of being addressed. It 
surely would be taken up as part of overall tax reform. But this bill 
surely is not an emergency; and costing over $1 billion, it is not paid 
for.
  Today, as this House leaves, there has been no action on Flint. That 
is an emergency--poisoned water, children at risk--and it is being 
required that emergency funding for Flint be paid for. In contrast, 
action on this bill is in no way an emergency, and it is not being 
required to be paid for.
  And still no attention to Zika. That is an emergency. It is spreading 
while some here in D.C. are stalling. I quote Anthony Fauci, the 
Director of the National Institute of Allergy and Infectious Diseases. 
This is what he told one writer:
  ``First, we took money from other infections. We borrowed money from 
ourselves from malaria and TB.
  ``When we ran out of that money, we started tapping into the Ebola 
funds that we really should not be tapping into because we still need 
them to keep the lid on Ebola.''
  ``When we ran out of that . . . Secretary . . . Burwell had to do 
something she really did not want to do. She had to take money using 
her transfer authority from cancer, diabetes, heart disease and mental 
health and give it to us to be able to continue to prepare the sites 
for the Zika vaccine trials that we will be performing.''

[[Page H5825]]

  So Zika, that is an emergency. It is spreading here while we, as I 
said, in D.C. are stalling. Here we go once again on this legislation, 
not an emergency, not being paid for. I think the way the House 
majority is handling this legislation and other legislation, or the 
lack of it, is inexcusable and in some respects is immoral.
  Let me read from the Statement of Administration Policy: ``The 
Administration is committed to helping startups, boosting innovation, 
and growing the economy, and is willing to work with the Congress on 
fiscally responsible measures to achieve those goals. However, the 
Administration strongly opposes H.R. 5719 because it would increase the 
Federal deficit by $1 billion over the next ten years. Failing to pay 
for new tax cuts is fiscally irresponsible.''
  Mr. Speaker, working on stock options and the tax treatment of it is 
one thing. Zika and Flint are orders of a different magnitude. For 
these reasons and others, I urge a ``no'' vote.
  I reserve the balance of my time.
  Mr. PAULSEN. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, when you ask a small-business owner or an entrepreneur 
about the challenge of starting a new business, they will often tell 
you that the key to their success is keeping talented employees and 
recruiting talented employees to keep their company moving forward.
  Today we have an opportunity to help startup companies. The 
Empowering Employees through Stock Ownership Act is a bipartisan 
initiative that focuses on two simple but very important concepts: 
keeping the United States on the forefront of innovation and promoting 
employee ownership. I want to thank the gentleman from New York (Mr. 
Crowley) for his bipartisan leadership on this issue as well.
  Mr. Speaker, today our Tax Code is forcing many mid- and lower-level 
employees at startup companies and businesses around the country to let 
a very promising investment opportunity pass them by. Unlike employees 
at larger, more established companies, startup employees are often 
offered compensation in the form of stock options, a significant part 
of their compensation. And it is a common practice for a business that 
is developing a new and promising technology but is not yet profitable.
  More and more employees of startups these days aren't exercising 
their stock options, and that is because if they do, they get hit with 
a tax bill from the IRS, a tax bill that can be unaffordable because 
they don't have the cash available to make the tax payment which is due 
immediately. As a result, employees are letting their stock options 
expire, missing out on thousands and thousands of dollars that could 
help them send their kids to college or plan for their retirement.
  So here is a simple solution today, Mr. Speaker. The Empowering 
Employees through Stock Ownership Act will let an employee defer their 
tax payment for a reasonable period--7 years--or until there is a 
market for their stock, which they could then sell to get the money 
needed to pay the tax bill.
  Many employees are drawn to startup businesses these days for the 
opportunity to work on shaping the future, the next innovative solution 
that can improve the lives of millions of people. It might be in health 
care, it might be treating cancer, or it could be in developing new 
mobile computer technology.
  They are also drawn, though, to the chance and the opportunity to 
have some ownership over this new idea. However, some are now choosing 
to instead stay at or go to a larger, established company because they 
know at a startup business they could face a very unfortunate tax 
situation.
  So to put it simply, Mr. Speaker, the Tax Code should not stand in 
the way of developing new, life-changing technologies. We should help 
these startups attract new employees and new talent and help those 
employees chase their dreams to seek new, creative environments that 
could lead to the next breakthrough innovation.
  The legislation is also designed to promote employee ownership. Only 
those individuals at startup businesses where similar stock options are 
offered to 80 percent of their employees or more will be eligible for 
the tax deferral provided in the bill. This will encourage businesses 
to offer more of their employees an ownership stake, as well as serve 
as a very important guardrail to prevent companies that only offer 
stock options to a select few high-level employees from taking 
advantage of any provisions in the legislation.
  Importantly, the Empowering Employees through Stock Ownership Act 
also contains several provisions to ensure that only those employees 
who truly need tax deferral are actually able to obtain it. Individuals 
that own more than 1 percent of a business, the CEO, the CFO, and the 
four highest paid employees at a business are not eligible for 
deferral.
  Mr. Speaker, the Empowering Employees through Stock Ownership Act is 
part of Leader McCarthy's Innovation Initiative here in the House. It 
is endorsed by the Venture Capital Association, the Small Business and 
Entrepreneurship Council, and dozens of businesses around the country.
  I include in the Record their three letters of support.

                                          National Venture Capital


                                                  Association,

                                                September 7, 2016.
     Hon. Erik Paulsen,
     House of Representatives,
     Washington, DC.
     Hon. Joseph Crowley,
     House of Representatives,
     Washington, DC.
       Dear Representatives Paulsen and Crowley: On behalf of our 
     nation's venture capital investors and the entrepreneurs they 
     support, I write to express our support for H.R. 5719, the 
     Empowering Employees through Stock Ownership Act, and to 
     thank you for your leadership on this important issue. This 
     legislation would allow startup employees to defer tax 
     liability on income arising from exercised but illiquid stock 
     options.
       As you know, stock options are a critical tool for 
     attracting talented individuals to work at our nation's 
     startups. Employees are often compensated with stock options 
     as a promise that if the startup succeeds, everybody shares 
     in the gain. And, stock options are particularly important 
     for startups who are often cash strapped and using all 
     resources available to develop and build a novel product. But 
     as the U.S. capital markets have become more hostile to small 
     capitalization companies, increasingly startups are opting to 
     stay private longer rather than pursue an initial public 
     offering (IPO). This has given rise to challenges for 
     employees at our nation's startups when their stock options 
     vest without a liquid market to sell their shares in order to 
     pay the taxes that are due.
       Your legislation to allow an additional period of time for 
     employees to defer taxes on exercised stock options is a 
     common sense solution to this challenge that will encourage 
     more talented Americans to help build today's startups into 
     tomorrow's Fortune 500 success stories. We must make new 
     company creation a national priority to compete in the 21st 
     century economy. Your bill will help us avoid a startup brain 
     drain by preserving the value of stock options for employees. 
     NVCA and its member firms look forward to working with you to 
     pass this legislation into law and protect the value of stock 
     options for startup employees. Again, thank you for your 
     leadership on this important issue.
           Sincerely,
                                                   Bobby Franklin,
     President and CEO.
                                  ____

                                                  Small Business &


                                     Entrepreneurship Council,

                                               September 19, 2016.
     Hon. Erik Paulsen,
     House of Representatives,
     Washington, DC.
     Hon. Joe Crowley,
     House of Representatives,
     Washington, DC.
       Dear Representatives Paulsen and Crowley: The Small 
     Business & Entrepreneurship Council (SBE Council) and its 
     100,000 members nationwide strongly support H.R. 5719, the 
     Empowering Employees Through Stock Ownership Act.
       Startup companies face many obstacles, including the 
     recruitment and retention of skilled employees. Employees at 
     startup companies often do not enjoy the higher salaries 
     offered at established companies, but are drawn to the idea 
     of helping to build an enterprise that is at the forefront of 
     the next innovation. At many startup companies, employees are 
     offered stock options or equity ownership to compensate for 
     lower compensation and to share ownership in the company. 
     Currently, if employees exercise these options, they are 
     required to pay taxes immediately but sometimes lack the 
     resources to do so. That means they may miss out on a 
     potential financial opportunity. This is a barrier for some 
     individuals to join a start-up, which means both the company 
     and individual lose, and so does our economy.
       H.R. 5719 resolves this barrier by allowing employees seven 
     years or before the stock becomes tradeable on an established 
     market to pay the taxes when they exercise options. H.R. 5719 
     will help startup companies attract

[[Page H5826]]

     and keep talented employees, and provide skilled individuals 
     another key incentive to join these promising businesses.
       Thank you for your leadership on this important issue. SBE 
     Council looks forward to working with you to advance H.R. 
     5719 into law.
           Sincerely,
                                                   Karen Kerrigan,
     President & CEO.
                                  ____

                                               September 19, 2016.
     Hon. Erik Paulsen,
     Cannon House Office Building,
     Washington, DC.
     Hon. Joseph Crowley,
     Longworth House Office Building,
     Washington, DC.
       Dear Representative Paulsen and Representative Crowley: We 
     write you to express our support for H.R. 5719, the 
     Empowering Employees through Stock Ownership Act (EESO). This 
     bipartisan initiative, led by your efforts, will make it 
     possible for more employees to obtain an ownership stake in 
     the companies they help build and make it easier for startups 
     and private companies to attract the talent necessary to grow 
     the economy.
       Part of the lure of startups and many private companies is 
     the ability for virtually all employees to own a piece of 
     their company. Unfortunately, it is difficult for many 
     private company employees to realize the value of their 
     equity (either through exercise or vesting) because of the 
     unique way tax rules apply to employee grants at private 
     companies. Under current law, employees are often required to 
     pay taxes on the value of their shares long before they are 
     able to sell and realize the economic value of those shares. 
     This is due to the fact that, unlike public company employees 
     who are able to sell shares in the public markets to offset 
     the tax consequences of exercised or vested equity grants, 
     private company employees do not have the ability to sell 
     their shares since no public market (or liquid secondary 
     market) exists. This means that many private company 
     employees cannot cover the cost of taxes at the time of 
     exercise/vesting through the sale of shares, but, instead, 
     must pay those costs out of pocket.
       This situation is exacerbated for employees who have seen 
     their options or shares grow significantly in value since 
     their date of grant. In this case, taxes due on the 
     difference between grant price and fair market value on the 
     exercise or vesting date will be significant, meaning that 
     many employees will never be able to afford to exercise their 
     options and hold shares. As a result, many private company 
     employees allow their equity grants to expire and lose a 
     significant component of their compensation and potential 
     future growth through the ownership stake.
       Your legislation would help solve this problem for many 
     employees by providing them with the ability to choose to 
     defer the payment of the income tax due upon exercise (or 
     vesting in the case of restricted stock units) until the 
     underlying stock is sold. This legislation is structured to 
     minimize the revenue impact to all stakeholders by simply 
     changing the timing of when income taxes are payable.
       Again, we thank you for your leadership on this issue. We 
     look forward to working with you to help enact this common 
     sense modification to our country's tax laws so that 
     employees of innovative American companies are able to 
     acquire and retain more of their ownership interests in the 
     businesses they help build.
           Sincerely,
       Palantir Technologies; Avalara, Inc.; AppNexus Inc; Bloom 
     Energy; Sonos; Space Exploration Technologies Corp.; Return 
     Path; Stripe; NASDAQ Private Market; Acquia Inc.; Addepar; 
     Sailpoint Technologies Inc.; Casper; Meetup; Betterment; 
     Squarespace; Bromium; Engine; TechNet: The Voice of the 
     Innovation Economy; Kleiner Perkins Caulfield Byer.
       Angel Capital Association; Techstars; Hackers/Founders; 
     Kansas City Startup Foundation; KC Tech Council; Y 
     Combinator; GitHub Inc.; 23andMe, Inc.; Gusto; TechNexus; 
     Accel; The Brandery; duolingo; Kabbage Inc.; Able Lending, 
     Inc.; Garmentory; hobbyDB; Foot Cardigan; Equityzen Inc.; 
     Foursquare.
       2nd MD; Zaarly; Wealthfront Inc.; Hyperloop One; Medici.md; 
     Automattic; Decibly; Medium; ClipMine, Inc.; whiteLabelLabs; 
     Red & Blue Ventures; Global Accelerator Network; AIRMIKA, 
     INC.; Innovation State; Hacom LLC; Village Capital; Help 
     Scout; Filament; 60secondz; GeekGirlWeb, LLC.
       Virtkick, Inc.; Speed & Function; 804RVA; Wefunder; 
     Neighborland; Goalbook; Bristlecone Holdings; Blue Startups; 
     Seed Philly; Lighthouse Labs; Hangar; Carao Ventures; Pick1; 
     Alpha Prime Ventures; eShares, Inc.; CrowdCheck Inc.; Lean 
     Team Tuning LLC.

  Mr. PAULSEN. I urge all my colleagues in supporting this very 
commonsense, bipartisan, and bicameral legislation to increase employee 
ownership and accelerate American innovation.
  Mr. Speaker, I reserve the balance of my time.
  Mr. LEVIN. Mr. Speaker, I yield such time as he may consume to the 
distinguished gentleman from New York (Mr. Crowley), someone who has 
been a sponsor of this bill, and I ask unanimous consent that he be 
allowed to control the balance of my time.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Michigan?
  There was no objection.
  Mr. CROWLEY. Mr. Speaker, I thank the gentleman from Michigan for 
yielding me the time.
  I first want to recognize Congressman Erik Paulsen, my colead in 
drafting the Empowering Employees through Stock Ownership Act that we 
are debating today here on the floor. I appreciate his work in helping 
to draft this and our offices working together to do that.
  We have drafted up a bipartisan bill that, on the merits, should be 
able to pass the House with an overwhelming majority--overwhelming 
majority. But I must state my disappointment with the majority--and not 
necessarily with the sponsor of this bill, but the leadership of the 
majority--for refusing to allow a simple up-or-down vote on my 
amendment, joined by the gentlewoman from California (Ms. Eshoo), to 
offset the $1 billion cost of this bill over 10 years, so that we could 
empower workers without saddling our children and our grandchildren and 
our great-grandchildren with more debt.
  Now that, in and of itself, is problematic in terms of hoisting 
additional debt on our children, grandchildren, and great-
grandchildren, if it weren't for the fact that we also have crises 
facing America, including the Zika virus.
  I wonder how the women who today are pregnant and have the virus in 
them feel about the fact that we are doing a tax bill today, unpaid 
for, and yet are requiring an offset or a pay-for for money to go 
towards Zika virus, or the fact that we have been here for over a year 
and have not yet found the wherewithal to help the good people of 
Flint, Michigan, unless we find a way to pay for that assistance and 
that help; but somehow we are able to do this worthy bill on its face 
without a pay-for.
  With respect to the underlying bill, I think all of us are growing 
increasingly concerned that far too many American workers have not been 
sharing in the success of the companies that they helped make 
successful. This bill aims to address that issue by promoting employee 
ownership, very egalitarian, something I know many on my side of the 
aisle are very excited about.
  The Empowering Employees through Stock Ownership Act would allow 
workers at privately held firms and startups to defer the income taxes 
on their stock options up to 7 years or until a triggering event occurs 
that allows the stock to be sold, whichever occurs sooner.
  The proposed legislation is needed to address real-world situations 
where employees of privately held firms, who are provided the 
opportunity to become part owners of the company they helped build 
through the granting of stock options and shares, cannot exercise that 
stock without paying taxes on them as income, even though the options 
cannot be readily sold. For example, there is no market for them to be 
sold on.
  Businesses often offer stock to employees to share the value of their 
companies, recruit and maintain talented workers, and offer 
compensation in addition to a salary that they receive. Stock options 
also provide smaller startup companies the ability to compete with 
larger, more established companies in attracting top talent.

                              {time}  1330

  Currently, when an employee exercises their right to obtain stock in 
their company, it is a taxable event and taxed in the same way as any 
other form of compensation they receive.
  In publicly traded companies, when employees exercise their stock 
options or shares vest, the employee is able to turn around and sell a 
small portion of that stock that is on the public market to pay the tax 
they owe, while at the same time continuing to retain shares and 
partial ownership of the company they work for.
  Unfortunately, for employees of private companies and startups, there 
is no market for employees to sell their shares to cover the tax 
liability that they are exposed to in the same way that a publicly 
traded company employee has those liabilities.

[[Page H5827]]

  This tax burden prevents employees of privately held companies from 
exercising their stock in the first place. That means they lose out on 
a share of their income, they lose out on the ability to become an 
owner in their company, and they lose out on part of their investment 
in their employer's long-term goals.
  This bill defers the taxes owed for employees of privately held 
companies for 7 years or until there is what is known as a ``triggering 
event,'' which occurs when a stock is sold. Examples of triggering 
events are stock buybacks, acquisitions, or the company itself going 
public.
  Besides making it easier for lower-wage workers to become owners in 
their company, this bill encourages companies to offer more stock to 
more workers. We do this by stating that, to obtain these important 
recruitment and retention benefits, a company must offer at least 80 
percent of their full-time workforce the option to own stock. This 80 
percent employee participation number excludes those who own 1 percent 
or more of the company as well as the CEO and CFO and the four highest-
paid officers.
  In small startups, excluding senior management and mandating an 80 
percent employee coverage test ensures that more employees and those 
further down the chain of command will be offered to share in the 
success of the company. It is a good policy and, as I said before, it 
enjoys bipartisan support.
  Because the bill is a tax expenditure, the Joint Committee on 
Taxation states that it would cost the Treasury and the American 
taxpayers $1 billion over 10 years.
  Unfortunately, as I stated earlier, an effort that was led by my 
colleague from California (Ms. Eshoo) and myself to ensure this good 
policy was enacted without further adding to the debt and the deficit 
and by adding debt to future generations, unfortunately, was rejected 
by the majority. It is unfortunate.
  While the Republicans in the Congress refuse to fund a billion 
dollars to help pregnant women in Florida, as I said before, fight off 
the Zika virus or provide clean drinking water to the people of Flint, 
Michigan, they are continuing their dangerous path of passing tax cuts 
that will explode the deficit.
  Indeed, just in 2016, Ways and Means Committee Republicans have 
passed almost $55 billion in tax cuts out of the committee, all of 
which, if enacted, would blow up the deficit.
  Let's be clear: Who will pay for this tab? Will it be us?
  No. We will pass the tab on to our children, our grandchildren, and 
our great-grandchildren to pay for our excesses. It all boils down to 
values, my friends.
  So while I oppose this legislation today--a bill that I am a 
cosponsor of--I am heartened by the fact that the Senate Finance 
Committee passed a companion bill to this bill just yesterday on a 
bipartisan basis. I don't know how they did it, but somehow they found 
an offset, Democrats and Republicans working together, which I 
attempted to do with my colleagues on the Republican side. They found 
an offset. It is remarkable the Republicans in the Senate thought it 
was important enough to pay for this and not add further debt to our 
future generations.
  I look forward to supporting this bill when it comes back to the 
House, fully paid for, when we take up the Senate bill. We know that is 
what is going to happen. I look forward to working with the Senate to 
enact this good policy into law, but without saddling our children, our 
grandchildren, and our great-grandchildren with the cost of this 
benefit.
  Mr. Speaker, I reserve the balance of my time.
  Mr. PAULSEN. Mr. Speaker, I yield 1 minute to the gentleman from 
California (Mr. McCarthy), the majority leader, who has moved forward 
and focused attention on a number of different innovation initiatives. 
These initiatives have come from listening to entrepreneurs.
  Mr. McCARTHY. I thank the gentleman for yielding and, most 
importantly, for his work. It is not just the work today, but it is the 
work every day for almost all Americans.
  When we talk about medical devices, they are so important to keep 
people alive. Well, there is one person in this House who led the 
charge to make sure that tax was repealed so that more medical devices 
and more jobs could be created, and that is the author of this bill. 
This bill is giving more Americans the opportunity for ownership. Isn't 
that the American Dream?
  It is interesting, Mr. Speaker. I hear a lot of words on this floor. 
I heard just recently words about values. You know what is interesting? 
The record doesn't lie. I hear on this floor about values and I hear on 
this floor about Zika.
  Do you know what?
  That is one of the greatest threats to the citizens of America. That 
is why this House did not delay in acting. We passed not once, but 
twice, funding for $1.7 billion. But, Mr. Speaker, the sad part was 
that one side of the aisle got into another fight and tried to punish 
Americans, so they all voted ``no.'' And then it goes back, but it 
passes--thank God--because the majority took it up and sent it to the 
Senate.
  Do you know what happened over in the Senate?
  The minority party has voted not once, not twice, but three times, 
not against the bill, but even allowing the bill to be brought up.
  While those Americans sit back and are very fearful about Zika, it 
was one party denying the bill to even come up in the Senate to get to 
the President.
  So, yes, Mr. Speaker, when we talk about values, values matter. That 
is what we are talking about today. The House is considering two 
important pieces of innovation initiatives. The values. The values of 
creating jobs. The first is by Representative Will Hurd to improve 
government IT systems. The second is by Representative Erik Paulsen to 
help startups attract and retain the best employees they can.
  These bills go right to the heart of the innovation initiative's two 
goals: to bring innovation into government and enable innovation in the 
private sector.
  Now, I am not breaking any news here, but too many of our technology 
systems in government are increasingly outdated. So here are the facts. 
Last year alone, the Federal Government spent 80 percent--get this 
right--80 percent of the $80 billion directed to IT just maintaining 
old legacy systems. That is 80 percent of $80 billion.

  Representative Will Hurd's bipartisan legislation will help bring 
government technology systems into the modern age, allowing the 
government to do its job more effectively, save taxpayers money, and 
keep public information secure. However, even as we use innovation to 
improve the way government functions, we can't ignore the importance of 
innovation in the private sector. You see, an innovation economy is a 
fundamental part of the American success story.
  Today we have these businesses we call gazelles. Gazelles are small 
startups that grow 20 percent every year or double every 2 years. 
Gazelles make up 4 percent of all new startups. But do you know what? 
They make up 70 percent of all new jobs.
  We have not reached America's full potential. Not even close. We need 
to update our laws to enable further innovation so that those with good 
ideas can create even more opportunity for Americans.
  The idea of innovation producing growth is why we are voting today on 
Representative Erik Paulsen's Empowering Employees through Stock 
Ownership Act. The truth is, when the startups are funded and founded, 
they can't offer potential employees the same salaries and benefits of 
those companies that have already become household names, but they can 
offer partial ownership. That is the American Dream.
  Offering stock options not only allows startups to attract the 
workers they need, it also gives employees a greater stake in the 
success of the company. But, unfortunately, the current Tax Code 
punishes many employees who own stock, taxing them before they even 
have the opportunity to sell the stock to pay the bill.
  Representative Paulsen's bill allows workers to actually own a piece 
of the company that they work for. It defers the tax they owe on the 
stocks for a time so that they have the opportunity to work for a young 
company that may not have the most resources, but does have a vision of 
a future that they can believe in.

[[Page H5828]]

  By giving companies the chance to hire and retain the best employees, 
do you know what happens?
  We will have more innovation, more growth, and more success for the 
American people.
  As you grow in America and get older and have children, you no longer 
worry about what you will do. You worry about what opportunities your 
children will have.
  Don't you dream that one day maybe your children can even own a piece 
of their company? But don't you hate to wake up and have the government 
punish you so that you can't be that owner? Why wouldn't you want 
government to work for you? Why wouldn't you want government to 
enhance? Why wouldn't you want innovation?
  You want a government that is more effective, more efficient, and 
more accountable. You want a private sector that is able to spur growth 
and create more jobs. And you want a country that can protect you from 
the Zika virus.
  Well, you know what? This Congress has acted on all of those and will 
act on the rest of them today. I hope that it is a bipartisan vote to 
represent all Americans.
  Mr. CROWLEY. Mr. Speaker, I yield such time as she may consume to the 
gentlewoman from California (Ms. Eshoo), my good friend and colleague.
  Ms. ESHOO. I thank the gentleman from New York, my good friend, for 
yielding.
  Mr. Speaker, I rise in reluctant opposition not to the legislation--
because I am a cosponsor of it and I think it is a very good bill and I 
think it is an important bill--Empowering Employees through Stock 
Ownership Act.
  The underlying policy of this bill--it is bipartisan, as has been 
stated--is to allow employees of privately owned companies to be able 
to defer taxes owed on exercised stock options for up to 7 years.
  I think that there is unanimity on this. I know something about stock 
options. I have represented Silicon Valley for 24 years. I led the 
House in a battle many, many years ago on stock options. And I won 
that, by the way. So I know how stock options work, and I think that it 
is very important for nonpublic entities--the startups, first of all--
to be able to attract people. When they attract these talented 
employees, the option of stock options with a deferred tax status would 
be very, very important. It is a magnet.
  We always want new businesses to be born. We want them to grow. We 
want them to go public. We want them to employ more people. That is the 
way our economy works. I think that it is a very, very important policy 
to support. But I also think that--as we recognize the responsibility 
to take a step to help to expand our economy, I also think it is 
responsible to think about how we conduct our finances. I wish I had a 
dime or a nickel for every time someone has come to the floor, 
especially from the other side, pounding their chest about the national 
debt.
  So here we have a combination of good policy and irresponsible fiscal 
policy.

                              {time}  1345

  Now, Mr. Crowley and I went to--I couldn't make it, but it was our 
amendment at the Rules Committee to pay for this. The Joint Committee 
on Taxation says it is going to cost over $1 billion over 10 years.
  Now, when first responders who got sick after the dollars were 
expended and we wanted them covered because they were, essentially, 
dying, they were over at the Energy and Commerce Committee, the 
majority said we are not doing this bill unless it is paid for. That 
was a national emergency, but you couldn't find the time or the way to 
take care of that.
  When are we going to stop charging things to the national debt? Why 
do you think it is all right to do it this way? I really wonder if you 
want bipartisan support.
  The American people want bipartisanship. They want it done 
responsibly. But they also want us--don't your constituents ask you how 
you are going to bring the debt down? Come on. This is like political 
cross-dressing here.
  Why wouldn't the Rules Committee say: You know what? These Members 
are right, and they are offering a very sensible way to pay for this 
bill.
  We gave you the pathway for it. We give you the answer for it. We say 
we will support the policy. We want it paid for. Why do you turn that 
down?
  So I think it is sad, I really do. And all of this happy talk that 
comes to the floor about innovation, and we know and we are doing and 
whatever, I have represented it for 24 years, and I think one of the 
values of my constituents is fiscal responsibility as well as good 
policy, and that is what we offered.
  So I urge my colleagues to examine the two prongs, not just the one. 
This could have been bipartisan and you could have passed it on a voice 
vote, for heaven's sake, if you had it paid for. And that is why I am 
on the floor to object to the way this is done, not to the policy, but 
that it isn't paid for.
  The SPEAKER pro tempore. Members are reminded to please address their 
remarks to the Chair.
  Mr. PAULSEN. Mr. Speaker, I yield 4 minutes to the gentleman from 
California (Mr. Rohrabacher), who has been a passionate advocate for 
entrepreneurship.
  Mr. ROHRABACHER. Mr. Speaker, entrepreneurship and employee ownership 
as well.
  I rise in support of H.R. 5719, the Empowering Employees through 
Stock Ownership Act, a bill that will allow certain employee recipients 
of employer stock to defer paying income tax on the stock until they 
are able to liquidate a portion of the stock to pay those taxes or once 
7 years have passed, whichever comes first.
  This is a modest but meaningful step in the right direction. It is a 
modest and meaningful step toward transforming our economy into an 
ownership society where employees are empowered with a direct and 
enduring stake in the well-being of their company.
  I applaud Representative Paulsen for offering this legislation and 
Chairman Brady for shepherding it through his committee and onto the 
floor.
  As you may know, Mr. Speaker, I have a bill that was crafted in the 
same spirit as this bill that we are considering today. It is a bill 
that, in my view, should be this body's next step, after this step 
forward, toward creating an ownership society.
  My bill, the Expanding Employee Ownership Act of 2016, which is H.R. 
4577, would permanently exempt from income tax liability any stock that 
was received by employees as part of a broad-based distribution to all 
employees, so long as the employees held on to the stock for 5 years. 
If the employee holds the stock for 10 years or more, after that, a 
mechanism is triggered that allows the employees to sell their stock 
free of capital gains tax. So by giving the employee a pass on income 
tax for their stock or capital gains tax for their stock, we will 
greatly expand the number of working people in our country who own part 
of the company and maybe own a majority of the companies owned by 
employees throughout this country.
  As we know, employee ownership has many positive attributes, and this 
bill takes us a step toward that. Studies show that employees who own a 
share in their company are more productive and prudent. Studies further 
show that employee-owned companies are generally more profitable and 
have a lower turnout rate. You have a solidarity between management and 
labor when the people working for a company own part of the company 
that they work for. It is more of a partnership.
  Free enterprise doesn't just mean profit motive for the capitalists. 
It means profit motive--not only just profit motive, but it means 
freedom for everyone to participate in a system where ownership is so 
important to standard of living.
  What has been really very disturbing in our society for these last 
30, 40 years is we see the income disparity that exists in our society. 
Much of it is because working class people have been kept out of 
capital ownership, and that small, small number of Americans who own 
the capital have now vast amounts of wealth.
  Well, I am not against people being wealthy, but I think that we 
should make sure our system is designed as our Founding Fathers meant 
it to be, where you have a maximum amount of people enjoying the 
freedom and liberty and rights of all the rest of the citizens.
  This bill today and my proposal would just take us down a path in

[[Page H5829]]

which employees and ordinary working people would not only have a stake 
in their own company, but probably would have a stake in owning 
capital, which would bring down this disparity between working people 
and people of wealth. So today I ask my colleagues to join me in 
supporting this legislation.
  Mr. CROWLEY. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, again I want to reiterate, I do appreciate working with 
Mr. Paulsen on this issue, and there is really no opposition from me in 
terms of the policy that we are attempting to put forward here on the 
floor today. We all agree on the merits of the bill. It is a good bill. 
I think you have heard that from the ranking member of the Committee on 
Ways and Means, and you also heard it from the gentlewoman on the 
Energy and Commerce Committee, Ms. Eshoo.
  Obviously, Mr. Paulsen and I both agree that this bill has merit. It 
is a good bill. But I don't believe this will become law today. This 
bill, the one we are actually debating and we will have a vote on 
today, in and of itself, will not be enacted in its form today.
  We need to enact good policies but not punish our next generation 
with new debt. That is something I have been reiterating over and over 
again. So I will vote ``no'' today on this bill, even though I am the 
cosponsor of the bill.
  That is not the only reason why I will not support the underlying 
bill today, not just because of placing the debt and the burden of that 
debt on my children, our children, your grandchildren and great-
grandchildren, but because of the fact that there are a number of 
crises going on in our country today that the Congress, the Republican 
Congress, simply can't get their hands around, and some are questioning 
whether they want to get their hands around them at all.
  Here is a shocking statistic. Back in June of this year, it was 
reported by the CDC that 234 women in the 48 States, the continental 
United States, 234 women had contracted the Zika virus--pregnant women. 
I am sorry, pregnant women, 234 pregnant women.
  While we were here in Congress in the month of June and July and then 
we broke for 7 weeks in August, and there was no work here done on the 
floor to address the issue of the Zika virus, as of the middle of 
September, of this month, in the U.S., 48 continental U.S. States, 749 
pregnant women now have the Zika virus. That is three times as many 
people in a 3-month period.
  Now, I don't suggest that possibly it would be, in 3 months from now, 
three times higher than it is today. In fact, I would argue it is 
probably a lot higher if we continue down this road of not addressing 
this issue at all.
  But I would have to be one of the 515 women who contracted the Zika 
virus at the end of June and--why were we here in Congress and did not 
enact Zika legislation all through July, all through the month of 
August into September? If I am one of those 515 women who is now 
pregnant, I have got to wonder: What is my government doing? They may 
have gotten it anyway, but at least the government may have been making 
an attempt to prevent them from contracting the virus.
  If I am one of those women, I am saying: The government didn't do 
anything. The Republican Congress, who controls the House of 
Representatives and controls the Senate, didn't do anything and, 
instead, forced the President to move money around the NIH, taking from 
cancer research, taking from the Ebola issue, taking those resources to 
try to stop the water from coming out of the dam, putting a finger in 
the hole. And that is a euphemism.
  I mean, at the end of the day, if you are one of the 515 women, there 
is no answer for it. There is no agreeable answer to them. They are 
living a nightmare.
  And let's think about the thousands and thousands and thousands and 
thousands of children under the age of 9 in Flint, Michigan, who have 
been exposed to horrific levels of lead poisoning in their drinking 
water, unbeknownst to them and their families.
  Imagine you are the mother of that child or the father of that child, 
and you were giving them that drinking water, the guilt you must feel 
because you didn't know that there was lead in that water. You didn't 
know that your local government, your State government had let you 
down, and now your Federal Government is letting you down because we 
are not doing anything for them.
  When the call is to do something and there are negotiations going on, 
we are not going to have to pay for the tax cuts; but folks in Michigan 
and Flint and folks in Florida--and now Texas has to be concerned, the 
southern tier of the United States--we are going to have to find an 
offset to address your emergent issues.
  A tax cut for a bill that I think is worthy, we don't need a tax cut 
for it. We don't need a pay-for for the tax cut. But for an emergent 
crisis like Zika, like what happened in Flint, we have to find an 
offset.
  How would you feel? How would you feel, America, if that happened to 
you? How would you feel about the Republican leadership of the House of 
Representatives and the Senate if that happened to you?
  I know how I would feel. I know how I feel. I feel disappointed. I 
feel let down. I feel like the Republican leadership and caucus in the 
House and the Senate doesn't have your back, doesn't have my back. That 
is how I feel about it. That is how Americans feel.
  Mr. Speaker, I yield back the balance of my time.
  Mr. PAULSEN. Mr. Speaker, I yield myself such time as I may consume.
  As we close, let me just start by thanking my colleagues on both 
sides of the aisle that have spoken in favor of the merits of the bill 
and in support for the bill. We all know that startups fuel innovation.

                              {time}  1400

  It is the entrepreneurial spirit and American ingenuity and know-how 
that has produced new technologies and has produced new breakthroughs 
and new inventions to improve health care, to improve society, and to 
create more jobs and economic growth. It is part of our DNA.
  Startups don't have the ability to offer potential employees and new 
talent the same benefits or same salaries that can be more valuable in 
the long run than larger institutions can offer to certain employees. 
So, instead, these startups have to go forward and offer their 
employees something that could be more valuable--a chance to be a part 
of the company, a chance to own a piece of the rock.
  A lot of startups offer stock options to recruit top talent. It is an 
incentive for an employee to work hard for the company they believe in 
or in the idea that they believe in. But more and more often, employees 
at these startups are missing out. They are missing out on the 
opportunity because they are not exercising their stock options to have 
the equity in the company that they believe in. They are not exercising 
them because if they do, they have to immediately pay the taxes on the 
income associated with the stock even though they may not be able to 
afford the cash payment to do so.
  A big number of these startups, Mr. Speaker, are privately held with 
no market for the employees to sell a portion of their stock to pay 
their taxes. The IRS demands the tax payment immediately, and so those 
employees let their options expire. They never have the chance to get 
the investment at a job they believe in and a job they enjoy.
  But, today, Mr. Speaker, we are fixing that. We have a solution. We 
are giving these startup employees a reasonable time period to pay the 
tax, allowing them to wait until their stock becomes tradeable on a 
public market so they can sell it to pay the bill.
  Helping the innovation economy is a key and important way to promote 
new products, to promote new services, and to promote new ideas from 
the dreamers, the inventors, and entrepreneurs we have in America. 
Letting those innovators attract the brightest and best talent is going 
to keep America out front, always innovating, always creating, and 
always inspiring American leadership.
  Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Graves of Louisiana). All time for 
debate has expired.
  Pursuant to House Resolution 875, the previous question is ordered on 
the bill, as amended.

[[Page H5830]]

  The question is on the engrossment and third reading of the bill.
  The bill was ordered to be engrossed and read a third time, and was 
read the third time.
  The SPEAKER pro tempore. The question is on the passage of the bill.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.
  Mr. CROWLEY. Mr. Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further 
proceedings on this question will be postponed.

                          ____________________