Employee Ownership Efforts Move Forward in NJ, MO
New Jersey Governor Proposes Funding for Conversion to Employee Ownership
New Jersey governor Phil Murphy’s proposed 2024 budget includes $6 million in funding for conversions to ESOPs, worker cooperatives, or employee ownership trusts. The proposal came out of a Wealth Disparity Task Force created in 2021. Modeled after a law in Colorado, the funding program would provide partial support for feasibility and other transaction costs. The proposal will have to receive authorization from the New Jersey legislature. Details on the funding are not yet available but should be when the governor delivers his budget address on March 7.
NJBiz, which reported the story on March 1, stated that “administration sources say that employee-owned firms often experience higher innovative output and R&D intensity. And they believe that broadening employee ownership of firms that build critical technologies, products, and services here in the Garden State will ensure that the gains of new energy sources and other innovations are shared by workers of these firms.”
Missouri Tax Break for Sales to an ESOP Progresses
Missouri law previously provided that sales to an ESOP in an S corporation qualified the sellers for a 50% exclusion from Missouri capital gains tax. That law sunsetted in 2022. SB 247 would remove the sunset provision. On February 20, the bill passed the Senate Economic Development Committee. Missouri’s capital gains tax rate is 4.95%.