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.
A 2013 survey showed 2,643 ESOPs in the country employed 470,000 invested workers.
“By making it easier for companies to become employee-owned, this legislation will not only grow the number of employee owned businesses, it will provide retirement security to more Americans,” Rep. Kind added.
Whether the 114th Congress, with its previously noted focus on retirement issues, will be more enthusiastic for passing ESOP legislation remains to be seen.
Last year’s effort attracted 37 co-sponsors, 20 Democrats and 17 Republicans.
In 2013, the Senate advanced its effort to facilitate ESOPs, behind bi-partisan legislation introduced by Sen. Ben Cardin, D-Maryland, and Sen. Pat Roberts, R-Kansas.
It too enjoyed wide bipartisan support, with 21 co-sponsors.
But beyond being read on the floor, and referred to the Committee on Finance, nothing ever became of the effort.