Biden Appointee Proposes Office of Employee Ownership
In a new report, Why Aren’t There More ESOPs: Assessing Barriers to ESOP Creation, Jared Bernstein, one of the three people Joe Biden named to the Council of Economic Advisers, urges the new administration to “set up a government office, housed perhaps in the Small Business Administration (SBA) or the Commerce Department, that provides direct assistance to small businesses that want to set up ESOPs or other shared ownership plans.”
The Bernstein report was done for the Employee-Owned S Corporations of America (ESCA), a lobbying organization. Bernstein said that “Given the adequacy of existing tax incentives to create ESOPs, this analysis does not support the need for further tax benefits to private companies that become ESOP-owned.” There is a good chance that the next Congress will pass legislation to allow owners of S corporations to receive the same Section 1042 "rollover" tax deferral that owners of C corporations can receive from selling to an ESOP, as described in a recent NCEO blog post. Bernstein states, however, that making it easier for business owners to navigate the ESOP process would “help smaller and midsize private companies that oftentimes do not have the funding or the professional advisor bench to consider and conduct an ESOP transaction holds important promise for aligning incentives within firms, improving the quality of jobs, and increasing workers’ wealth while generating important new benefits in productivity for their companies.”
In an effort to provide clarity about the potential impact this new administration will have on the employee ownership world, we will be hosting a free public webinar with community stakeholders on February 3rd. We hope to see you there.