Bipartisan legislation has been introduced to make the creation of ESOPs more available to small businesses.
Rep. Ron Kind, D-Wisconsin, and Rep. Dave Reichert, R-Washington, both members of the House Ways and Means Committee, introduced the Promotion and Expansion of Private Employee Ownership Act.
The law would expand financing opportunities through tax incentives for S corporations looking to pass ownership of private companies on to employees, and provide technical assistance for setting up the plans, among other things.
“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,” Rep. Reichert said in a statement.
Several attempts to pass similar legislation have stalled over the past several years. Most recently, Kind and Reichert introduced legislation in the last Congress, less than a year ago.
Proponents of ESOPs tout their efficiency in building retirement nest eggs for employee-owners.
The Employee-Owned S Corporations of America, a lobby for employee-owned private companies, says ESOPs have account balances three to five times higher than the average 401(k) participant — five to seven times higher for those workers nearing retirement.