Nancy Wiefek
A new study conducted by John Zogby Strategies on behalf of Employee-Owned S Corporations of America (ESCA), Employee Financial Health and Sentiments Amid the Pandemic, summarized in this press release, provides evidence that employees in S corporation ESOPs suffered fewer financial setbacks compared to a sample of employees at companies without ESOPs.
Timothy Garbinsky
Thank you to all of the sponsors, speakers, attendees, and staff who helped make our 2021 annual conference a rousing success! It not only was the largest virtual gathering in NCEO history but with 1,940 attendees was the second-largest event we’ve ever hosted, placing it just behind our last in-person annual conference in Pittsburgh, PA.
Loren Rodgers
The NCEO is excited to announce that the 2021 Fall ESOP Forum will be back in September, this time as a hybrid event! After more than a year of virtual education, the NCEO’s 2021 Forum will take place both onsite and online. This one-of-a-kind gathering will give attendees, speakers, and sponsors the ability to meet and engage with the ESOP community from wherever they are—onsite in San Diego, online via our state-of-the-art virtual platform, or both.
Loren Rodgers
The U.S. Innovation and Competition Act (formerly titled the Endless Frontier Act (S. 1260) has now passed the Senate. As it was being considered, Senators Bernie Sanders (I-VT) and Jerry Moran (R-KS) submitted an amendment that would incorporate a version of the WORK Act (the Worker Ownership, Readiness, and Knowledge Act). The amendment was never acted on, however. The WORK Act, versions of which have been proposed by Sen. Sanders in prior Congresses (see S. 1081 from 2017, for example), would create a $50 million fund to be disbursed over four years for outreach to promote employee ownership through employee ownership centers sponsored or contracted by individual states. An office within the Department of Labor would create an “employee ownership and participation” initiative to coordinate and provide technical assistance for the program. A state, or an organization designated by a state, could receive a maximum grant of $330,000 per year, which would be increased by 5% per year, from 2022 through 2026. The idea of federal support for state-level employee ownership has been promoted by several think tanks, and has roots in an idea raised by the NCEO’s Corey Rosen in 1986 and initially introduced by Senator James Sasser that year.
Corey Rosen
On May 5, 2021, the House Ways and Means Committee unanimously passed the Securing a Strong Retirement Act of 2021, referred to as "SECURE Act 2.0" (H.R. 2954) in reference to the SECURE Act of 2019. The bill makes a number of changes to retirement plan law but, unlike the version introduced last year, does not include a provision allowing owners of S corporation ESOPs to get the same Section 1042 tax deferral on the sale of stock to an ESOP trust as owners of C corporation ESOPs can. S. 1770, sponsored by Senators Cardin (D-MD) and Portman (R-OH), does.
Loren Rodgers
In the factsheet Budget 2021-2022: Tax Incentives to Support the Economy (PDF, page 10), released on May 11, the Treasury of Australia announced that it would propose reforms to enhance employee ownership. The reforms, if enacted as proposed, would change the time at which taxes are due on income from tax-deferred employee share schemes (ESS), which is currently taxed at the cessation of employment.
Corey Rosen
Several California Assembly and Senate members have written letters to the leaders of the Assembly and Senate budget committees urging inclusion of a $36.5 million appropriation to fund a one-time effort to support employee ownership in the state. So far, the proposal has not generated any opposition.
Corey Rosen
New York has traditionally been a state where it is difficult to operate as a majority ESOP-owned engineering, architectural, landscape architectural, or land survey firm. Existing law requires that a majority of the owners be licensed professionals. Following a 60-0 vote on May 4, the New York Senate passed S. 5261 a bill that would allow majority-owned ESOPs to qualify under New York corporate practice rules for these firms if 75% or more of the company’s voting trustees or ESOP plan committee (often the board of directors) are members of the profession.
Corey Rosen, Scott Rodrick
The tax provisions of the Biden administration’s American Families Plan would provide a substantial, if unintentional, boost to employee stock ownership plans (ESOPs). The proposal would significantly increase capital gains taxes for wealthy individuals, marginally increase the top individual tax rate, and increase the top marginal corporate tax from 21% to 28%. Additionally, the step-up in basis at death would be removed. Whether the changes are good economic policy or not, or are likely to pass in any form, will be hotly debated. But their impact on ESOPs could be dramatic.
