Lawmakers in the House and Senate have re-introduced legislation to encourage the creation of employee stock ownership plans in S Corporations.
Senator Ben Cardin, D-Md., introduced S. 1212 last week. S. 1212 would amend the Internal Revenue Code of 1986 and the Small Business Act to expand the availability of employee stock ownership plans in S corporations, also known as S ESOPs, in America. The bill was co-sponsored by 13 other senators.
S. 1212 is the Senate companion bill to H.R. 2096, the Promotion and Expansion of Private Employee Ownership Act of 2015, which was introduced on April 29 by Rep. David G. Reichert, R-Wash., and Ron Kind, D-Wis.
Cardin introduced similar legislation in 2013 during the previous congressional term (see Senators Introduce Bill to Expand Use of S ESOPs to Encourage Greater Retirement Savings).
The Promotion and Expansion of Private Employee Ownership Act of 2015 includes provisions to encourage owners of S Corporations to sell their stock to an ESOP, expand financing opportunities for S Corporation ESOPs, provide technical assistance for companies that may be interested in forming an S Corporation ESOP, and ensure that small businesses that become ESOPs retain their Small Business Association certification. Reichert and Kind were supported by cosponsors Reps. Erik Paulsen, R-Minn., Earl Blumenauer, D-Ore., Pat Tiberi, R-Ohio, Richard Neal, D-Mass., Charles Boustany, R-La., and Bill Pascrell, D-N.J.
“This legislation is critical to giving employees ownership over their work and retirement in a time when many people are concerned about their retirement savings,” Reichert said in a statement last month. “By encouraging the establishment of employee-owned businesses, we allow more hard-working Americans a stake in their companies and hope for a secure future. Confidence in the future can only help incentivize workers and grow our economy.”
A business trade group known as the ESOP Association praised the re-introduction of the legislation.
"Needless to say, it is extremely pleasing to see these Senate leaders, representing bi-partisanship, stand up for employee stock ownership through ESOPs,” ESOP Association president, J. Michael Keeling said in a statement Monday. “The ESOP Association notes its appreciation for these members who have joined in support of employee ownership and taken the lead to address issues that relate to increasing ownership shares among average pay Americans," "Research proves that ESOPs are more profitable, more productive, and provide sustainable jobs. We need policies to encourage employee stock ownership, and the proposed policies in S. 1212, should address core social issues such as adequate retirement security and making sure working Americans have an ownership stake in our capitalistic system.”
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