A CORPORATE STRATEGY FOR INCOME MAINTENANCE BASED ON The Second Income Plan: BUSINESS do to solve the income What can maintenance problem? The answer is to employ as widely as possible Employee Second Income Trusts. The following illustrates how these operate: The main highlights of the operation of these trusts is as follows: An employee deferred compensation trust is established, or if one is already in existence, it can be remodeled to suit Second Income Trust financing purposes. Loan financing from conventional loan sources - insurance companies, banks, etc. is arranged so that loans are made directly to the deferred compensation trust. The trust takes the loan proceeds and invests it in the sponsoring corporation's stock. The corporation sells and issues its stock, at the full current market value, to the trust. The trust gives its note to the lendor and may pledge the stock to secure it. The sponsoring corporation guarantees that it will pay off the note to the lendor in annual installments through the trust, rather than directly to the lendor as it would if the corporation itself were the borrower. The Internal Revenue Service, within the limits prescribed by the Code, will treat the corporation's loan repayments as "contributions" to the employee trust, because under this arrangement, the employees, including corporate management, become the owners of the stock as the debt is repaid, without any reduction in their takehome pay or fringe benefits. WHAT CAN GOVERNMENT DO TO SOLVE THE The Second Income Plan ? The Second Income Plan can be accomplished in 2 steps: Step 1: An Act of Congress to: Repeal the "Employment Act of 1946 (with its narrow focus on LABOR alone. Enact the "Full Production Act of 196_ (with its broader focus on both LABOR and CAPITAL) This would establish the national policy. Step 2: A series of "Ways and Means" by both government and business to encourage the widespread ownership of CAPITAL. This would implement the national policy. A partial list of proposed "Ways and Means to implement the Second Income Plan. Change death taxes to induce the wealthy to spread out their wealth. • Encourage corporations to set up more employee stock-ownership trusts. • Devise ways for closely-held family corporations to sell out to employees. Finance urban-renewal projects so that the displaced families can own shares in the new buildings. • Finance government water-and-power projects (like TVA) so that the families who live there can become owners. Finance anti-trust divestiture of corporate assets so that thousands of families can become owners. Finance sale of government-owned corporations (like General Analine) so that thousands of families can become owners. Finance industrial development in impoverished areas (like Appalachia) so that the families who live there can become owners. Set up the "financed capitalist" program whereby families can borrow on insured loans (like FHA) to buy stock which pays for itself out of dividends. |