Sanders pledges 20% worker stake in sweeping governance overhaul
WASHINGTON — Sen. Bernie Sanders proposed sweeping changes to U.S. corporate governance that would give workers 20% ownership in public companies and the right to elect 45% of their directors, while expanding the government’s power to stop mergers.
The 2020 Democratic presidential contender’s “corporate accountability plan” proposes to restore the corporate tax rate to 35% from 21% and repeal the 2017 tax cuts passed by Congress with only Republican votes. He also proposes to review mergers approved by the Trump administration and unwind any deemed “improper.”
“We will demand that profitable corporations pay their fair share of taxes,” Sanders said Monday in a statement. “We will give workers an ownership stake in the companies they work for. And we will start breaking up some of the largest and most powerful companies in America to lower prices for consumers, help small business and make markets competitive.”
The chance of Sanders’s plan becoming law is virtually zero. Republicans who control the Senate 53-47 are slightly favored to remain in power after 2020, and even if Democrats take over they would lack the 60 votes needed to clear legislation. Moderate Democrats would likely balk at the core ideas in his plan.
The proposals by the self-described “democratic socialist” go further than the other contenders and are a broad rethinking of worker rights. Sanders’s requirement for 20% stock ownership would apply to all publicly traded firms, corporations with at least $100 million in annual revenue or $100 million on their balance sheet.
The plan helps to highlight his differences with progressive rival Elizabeth Warren, who has moved ahead of Sanders in polls of presidential primary voters. In an interview Sunday on ABC’s “This Week,” Sanders noted that Warren has said she’s a “capitalist through her bones,” while he is not.
“I am, I believe, the only candidate who’s going to say to the ruling class of this country, the corporate elite: Enough,” Sanders said on ABC. “We need real change in this country.”
Under the Sanders plan, companies would be required to provide at least 2% of their stock to workers annually until employees have 20% ownership, by issuing shares and through new “employee ownership funds” that would gain rights similar to those of institutional shareholders.
The plan would ban stock buybacks — which have become more frequent since the tax cuts took effect — but that Sanders and other critics contend are little more than stock-price manipulation.
Sanders’s support has stalled as Warren vies with former Vice President Joe Biden to lead the crowded field. Even before an Oct. 1 heart attack sidelined his hard-charging campaign, he had fallen to third place, after trailing only Biden in surveys for most of this year.
But Sanders has emerged as an idea leader, with more Democrats embracing his proposals for universal health care and a $15-an-hour minimum wage. He also raised $25.3 million in the third quarter, topping the Democratic field and assuring he has the cash to fuel his campaign well into next year’s primaries.
Warren also has put forth some broad ideas on corporate governance, including “accountable capitalism” legislation that would require companies to let workers elect 40% of their boards of directors.
Sanders’s plan has several components. Companies mandated to provide worker shares also need to obtain a “stakeholder charter” from the Commerce Department that requires that the interests of all stakeholders — workers, customers, shareholders and the communities where they operate — be considered when making decisions.
Workers would also get a “right of first refusal” to buy a company or factory if the corporation wants to sell or shutter it.
On tax policy, Sanders expands on his approach of taking on the wealthiest Americans and corporations. The Vermont senator embraces repeal of all corporate tax breaks enacted under President Trump. He also proposes closing “loopholes” and eliminating the use of offshore tax havens, in part by applying the same tax rate on offshore and domestic income and applying a per-country limit on the foreign tax credit.
On the campaign trail, Sanders has repeatedly pointed out that since the Trump tax cuts were put in place, some large companies including Amazon.com Inc. have not paid federal income taxes, and instead have been getting tax refunds. The campaign says that in 2018, 60 profitable Fortune 500 companies paid no federal income taxes and received a net corporate tax rebate of $4.3 billion.
On mergers, he proposes to expand the powers of the Federal Trade Commission, including letting it set fines and halt mergers without having to go to federal court. He also wants to have “bright line” guidelines that set caps on mergers and total market share of the new entity.
He also is proposing changes to laws governing contracts, including banning non-compete clauses that can affect workers’ ability to move into new jobs, and also mandatory arbitration clauses that prevent workers and consumers from suing companies in court.
Sanders has been sidelined since suffering the heart attack while in Las Vegas. He’s scheduled to return to campaigning in the next week, and will take part in Tuesday’s Democratic debate in Ohio.