The ESOP Association Blog

Covering ESOPs and employee ownership

ESOPs Debated Supreme Court

On April 3, 2014, Michael Keeling, President of The ESOP Association gives an update following the oral arguments presented to the Supreme Court on Wednesday, April 2, 2014 in the case of Fifth Third Bancorp, et al., v. John Dudenhoeffer, et.al.

Argument Transcripts

Filed under: Government Affairs,

Congressman Ron Kind Visits ESOP Company, W.A. Roosevelt

On February 13, 2014, Congressman Ron Kind (D-WI) was on site to visit W.A. Roosevelt in La Crosse, WI. Congressman Kind spent an hour at the company meeting employee owners and spending time with members from the company’s ESOP committee. W.A. Roosevelt is a leading distributor of quality plumbing, electric, refrigeration, and heating and air conditioning equipment & supplies.  W.A. Roosevelt is a division of Dakota Supply Group, a member of The ESOP Association.

Kind WA Roosevelt 1

Kind WA Roosevelt 2

Filed under: Employee Ownership Message, Government Affairs, Member Services, TEA Members, , , ,

Government Affairs Update, March 2014

ESOP Association President, J. Michael Keeling, provides Association members with an update on the Administration’s FY 2015 Budget and the impact on the ESOP community.

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Filed under: Government Affairs, ,

Administration Again Takes Aim at Employee Ownership

The ESOP Association released the following press release today.

For Immediate Release: March 4, 2014

For More Information: Amy Gwiazdowski, amy AT esopassociation.org

Administration Again Takes Aim at Employee Ownership

March 4, 2014 (Washington, DC) – Today, The ESOP Association expressed disappointment once more over a provision in the President’s Fiscal Year 2015 budget that pertains to employee stock ownership plans (ESOPs). Included in the budget document is a provision to ‘eliminate the deduction for dividends on stock of publicly-traded corporations held in certain ESOPs.’

“Obviously, we are disappointed this provision has been included in the President’s budget,” said ESOP Association President, J. Michael Keeling. “We are baffled by the Administration. How can the Administration preach about creating jobs and then plan to take away a proven policy that sustains jobs? Furthermore, the provision the Administration wants to kill was added in 1984 by Congress to address income inequality by encouraging employee owners to have more income from ownership. It is counter-intuitive. As we’ve said before, research proves that ESOPs, and companies with other forms of employee stock ownership, provide more sustainable employment. The Administration needs to step up and encourage broad-based inclusive capitalism and increase employee ownership to ensure sustainable employment for U.S. workers, and more income for average pay employee owners, not decrease support.”

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The ESOP Association is the national trade association for companies with employee stock ownership plans (ESOPs) and the leading voice in America for employee ownership. The core cause of The ESOP Association is the belief that employee ownership will improve American competitiveness, increase productivity through greater employee participation, and strengthen our free enterprise economy. More information: website – www.esopassociation.org and blog – www.esopassociationblog.org.

Filed under: Government Affairs,

Tax Reform Update, February 28, 2014

With the release of the Tax Reform Act of 2014, ESOP Association President, J. Michael Keeling, provides Association members with an update on the proposed legislation and where ESOPs stand.

Filed under: Government Affairs, , , , ,

2014 Winter Advocacy Kits Available

The updated 2014 Advocacy Kit and 2014 Congressional Company Visit Kit are now available on The ESOP Association’s website. Copies of the 2014 Winter Kits can be downloaded from The ESOP Association’s website.

The newly updated Kits contain information on: House – Moving to Curtail Tax Benefits for ESOPs?; Senate Tax Reform Update; Obama Administration Condemns ESOPs and Proposes Repeal of ESOP Tax incentive (Administration is Wrong).

Filed under: Government Affairs, Member Services, Publication, ,

Tax Reform Proposal Takes Shape

ESOP Association President, J. Michael Keeling, provides Association members with an update on tax reform and shares new information he has learned about the general shape of the Ways and Means Committee tax reform proposals. The precise schedule of the Ways and Means Committee is not known; this report is the beginning of learning what the ESOP community may face.

Filed under: Government Affairs, ,

What, “We” Worry?

This article originally ran in the December 2013 issue of the ESOP Report, the newsletter of The ESOP Association. Archived issues are available on The ESOP Association’s website.

We’re a week + into 2014 but this column is a nice reminder for members of the ESOP community.

Many will recall that in the last quarter of the 20th Century, Alfred E. Neuman, the face of the then famous Mad Magazine, captured the public’s fancy with his slogan, “What, Me Worry?” complete with a silly expression. The ESOP community needs to avoid the “What, Me Worry” view of possible rewrites of the Federal income tax laws that impact ESOP creation and operation because cable news TV keep telling audiences that Congress will not pass a tax reform bill.

The ESOP Association will continue to take a different view, and yes, ESOP advocates should worry about tax laws impacting your ESOP accounts and your ESOP clients until…

Later, this column will give the signal when it’s safe to stop worrying.

Here is an analysis that goes beyond the superficial media reports.

Tax reform is important to the ESOP community without regard to whether the House of Representatives considers tax reform legislation in 2014; without regard to whether the Senate considers tax reform legislation in 2014; without regard to whether tax reform legislation lands on President Obama’s desk in 2014.

Why say it’s important even after saying legislation is not going to be considered by the full Congress and thus never become law in 2014?

Simple — tax law history. Regarding major tax legislation, what the House Ways and Means Committee agrees to, becomes the foundation for what actually makes it to a President, the same year, the next year, or even the next two to four years.

Let’s get specific. In 2014, if the House Ways and Means Committee reports to the full House a tax reform bill that repeals the current favorable tax treatment of S ESOPs, or the cap gains deferral for sale to an ESOP of stock of a privately held C corporation, or the tax deduction for dividends paid on ESOP stock by a C corporation, or the possibility that both principal and interest are tax deductible for payments on a loan to acquire employer stock for the ESOP, or contributions to an ESOP are capped along with all other ERISA dc plans at a level below current law, or any other schemes to raise tax revenue by limiting the benefits of an employer sponsored retirement savings plan, then any of the above in a tax reform bill recommended by the Ways and Means Committee has better than a 50% chance of being law someday. [This sentence was long for a reason --- to explain that some provisions of a tax reform bill could impact your ESOP and not be labeled an “ESOP” provision.]

So, during this special time of year, one might welcome the New Year with the false serenity that their ESOPs are A-OK in terms of the year 2014, and back off on the goal of educating, or re-educating, their members of Congress that ESOPs are good for the employees, good for the company, good for the community, and good for the United States.

It is time to toast the New Year, and to rededicate to the principle that persistent repetition is the best policy with regard to making sure our modest national policy promoting employee ownership through the ESOP model is continued.

And to answer the “until” question above, the following words, “Until the Chair of the House Ways and Means Committee says firmly, with no ifs and buts, ‘The Committee will not recommend a tax reform bill in 2014.’” And he just might say no to a tax reform bill at some point in 2014, but why take a nap thinking he will.

Filed under: Government Affairs, , , ,

Tax Reform Update, January 2014

In the first tax reform update of 2014, ESOP Association President, J. Michael Keeling, provides Association members with an update on tax reform and a new report from the Joint Committee on Taxation that discusses ESOPs. He also touches briefly on the ESOP case before the Supreme Court.

Filed under: Government Affairs, , ,

Tax Reform Update, December 2013

In a final 2013 tax reform, ESOP Association President, J. Michael Keeling, provides Association members with an update on the process and what the ESOP community needs to do in response to coming changes. He also touches briefly on the recent budget resolution and an ESOP case before the Supreme Court. Read The ESOP Association’s statement about the case here.

Filed under: Government Affairs, , , , ,

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