WASHINGTON – U.S. Senator Ben Cardin (D-Md.), Chair of the Senate Small Business Committee and a senior member of the Senate Finance Committee, and Senator Steve Daines (R-Mont.), also a member of the Senate Finance Committee, today introduced an expanded version of the Promotion and Expansion of Private Employee Ownership Act — bipartisan legislation to encourage retirement savings by fostering the growth of S corporations that are owned by Employee Stock Ownership Plans (S-ESOP). Congressmen Earl Blumenauer (D-Ore.-3) and Mike Kelly (R-Pa.-16), both members of the House Ways and Means Committee, have introduced the legislation in the House of Representatives.
The bicameral bill would eliminate barriers that businesses and their owners currently face in establishing a new S-ESOP or expanding the employee-ownership stake in an S corporation. With the creation of a new “Employee Ownership Advocate” at the Department of Labor with a mandate to assist employee-owned companies and review ESOP-related regulations before they are finalized, the legislation would solidify advocacy for S-ESOPs from development through all stages of growth.
“Employee ownership provides small business owners and workers incredible opportunities to build generational wealth and create resiliency for their businesses. We need to preserve and expand this structure to enable more businesses to grow and to allow employees to accrue valuable benefits,” said Senator Cardin. “Americans deserve the opportunity to build generational wealth and ESOPS are a proven path toward this goal.”
“While Montana workers and businesses struggle to navigate this challenging economy, it’s important we strengthen creative ways to help folks grow their wealth and reach financial security. ESOPs help expand ownership of the economy to middle class Montanans and make it easier for folks to invest toward a comfortable retirement,” Senator Daines said. “America is the land of opportunity, and our bipartisan bill will help protect and preserve the American dream for Montanans from all walks of life.”
“With growing wealth inequality and generations of Americans worried about how they can retire comfortably, employee-ownership is more important now, than ever,” said Rep. Earl Blumenauer. “I have seen firsthand the benefit of Employee Stock Ownership Plans in my community and in communities across the country. By increasing productivity and worker retention while improving retirement security, this legislation is something employers and employees alike can get behind.”
“By expanding Employee Stock Ownership Plans (ESOPs), we can put more hardworking Americans on the path to financial prosperity and a secure retirement,” Rep. Kelly said. “This bipartisan, bicameral plan is a win-win for workers and businesses: it allows small- and medium-sized businesses to include employee ownership in the compensation package, and ESOPs often retain more employees as a result. This is great legislation for both the employer and employee alike!”
Industry estimates place the number of employee stock ownership plans at more than 6,500 serving almost 14 million participants. ESOPs have a proven record of keeping small businesses and jobs in their local communities, rewarding employees for their contribution to the success of the business, and creating more productive and resilient businesses.
The Promotion and Expansion of Private Employee Ownership Act:
- Incentivizes owners of S Corporations to sell their stock to an ESOP by providing deferral treatment for contributions of S Corporation stock to an ESOP so long as certain reinvestment requirements are met
- Provides technical assistance for companies that may be interested in forming an S-ESOP
- Ensures small businesses that become ESOPs retain their SBA certification; and
- Affirms the importance of preserving the S-ESOP structure in the Internal Revenue Code
- Creates the position of an “Employee Ownership Advocate” at the Department of Labor to support the formation and success of employee ownership.
The bill cosponsored by Senators Debbie Stabenow (D-Mich.), Mike Crapo (R-Idaho), Sherrod Brown (D-Ohio), Susan Collins (R-Maine), Amy Klobuchar (D-Minn.), Jim Risch (R-Idaho), Jon Tester (D-MT), Bill Cassidy (R-La.), Angus King (I-Maine), Marsha Blackburn (R-Tn.), Cory Booker (D-N.J.), John Barrasso (R-Wy.), Bernie Sanders (I-Vt.), Todd Young (R-Indiana), Chris Van Hollen (D-Md.), Chuck Grassley (R-Iowa), Jack Reed (D-RI), Tina Smith (D-Minn.) and Peter Welch (D-Vt.).
The following members have cosponsored the House legislation: Representatives Danny Davis (D-Ill.-7), Brad Wenstrup (R-Ohio-2), Bill Pascrell (D-N.J.-9), Carol Miller (R-W.Va.-1), Terri Sewell (D-Ala.-7) and Ron Estes (R-Kans.-4).
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