Dive Brief:
- Hillary Clinton, one of the leading Democratic presidential contenders, has proposed tax breaks for companies that create programs to share profits with their employees in order to help the middle class, according to the Wall Street Journal.
- Profit-sharing ensures that corporate profits benefit “a broad base of workers” and not just top executives, according to a report issued earlier this year by the Center for American Progress (a liberal think tank with deep ties to the Clinton campaign, according to the Journal).
- Clinton said she would give more details about this plan during a Thursday event in New Hampshire.
Dive Insight:
In a profit-sharing plan, an employer makes contributions to a worker’s salary and is usually tax-deferred, like a 401(k). Some companies place a stipulation stating that employees need to have worked for the company for a certain amount of time before they receive 100% of the contributions.
In such a plan, tax breaks could be available if companies contribute as much to the bottom 80% of employees as to the top 5%, according to CNN Money.
Publicly traded companies already cannot deduct more than $1 million in executive compensation unless it is performance-based, said Steve Rosenthal, a senior fellow at the Tax Policy Center, to CNN.
