November 15, 2013 • 8:40 am 1
October 31, 2013 • 10:00 am 0
This article originally ran as the Washington Report column in the October 2013 issue of the ESOP Report, the newsletter of The ESOP Association. The ESOP Report newsletter is available to Association members on the website.
With the conclusion of Employee Ownership Month, we thought it was an important message to stay focused on your ESOP.
There is no question that the mess in D.C. with the Congress and the President not able to keep basic government functions operational causes most people to throw their hands up and say, “Don’t bother me about possible legislative action involving ESOP laws; Congress cannot even keep the government’s doors open. Fie on all.”
This reaction dominates citizen views, be they left, right, middle of the road, or all of the above.
This column has often said that the effective advocate has to understand the Big Picture to win a specific campaign for ESOPs. But, as Ralph Waldo Emerson said, a foolish consistency is the hobgoblin of small minds.
So, ESOP advocates will be taking a very risky posture to tune down outreach to their members of Congress on the grounds that Congress will do nothing to alter current tax laws to the detriment of employee owners.
Number one, the Congressional tax committees are not Congress. What they do in developing new tax laws is not 100%, or even 50%, determined by the Congressional and White House gridlock.
Number two, what the tax committees do is 90% of the final tax law changes that will be included in a reformed tax code when action by Congress is finally taken.
In other words, the tax committees may finalize their versions of a new tax bill in 2014, and Congress may not send a new tax reform proposal to the President until 2015/2016 or even beyond. But that 2015/2016 proposal will be very likely be nearly the same as what the tax committees agreed to in 2013/2014.
Number three, what is the negative outcome of ESOP advocates continuing to make the case that the Federal tax code should continue a modest national policy to continue the best jobs policy in the U.S. because ESOP companies in the vast majority of instances are more productive, more profitable providing locally-controlled, sustainable jobs with excellent retirement savings benefits? There is none.
Some ESOP advocates also explain their sitting on the sidelines because her or his member of Congress is not on the Congressional tax committees — the House Ways and Means Committee and the Senate Finance Committee. Constituent to member advocacy is the most effective advocacy work possible; the second most effective advocacy work is Congressional member to Congressional member. In other words, a Republican member of Congress not on Ways and Means advocating for ESOPs because her or his constituent has asked him or her to do so with a Republican on the tax committee, especially if from the same state or region, is very effective. In other words, a pro-ESOP statement from a Texas Republican not on Ways and Means to a Texas Republican on Ways and Means or a New England Democrat not on Ways and Means to a New England Democrat on Ways and Means is priceless.
In sum, do not let disgust with partisan shenanigans in D.C. back you off advocating for ESOPs with your Congress people.
Be safe; not sorry.
October 21, 2013 • 3:53 pm 0
This article ran as the Washington Report in the September issue of the ESOP Report. The ESOP Report is the newsletter of The ESOP Association. The ESOP Report newsletter is available to Association members on the website.
People who care about ESOPs, who are members of the Association, who do not wish to take a chance and dismiss, like TV pundits do, talk of ‘Congress will never do tax reform’ are asking, “What can we do to protect ESOPs and what is the Association doing to protect our ESOP?”
For over 20 years, the answer to the ‘what can we do’ question has remained the same, and will remain the same — tell your ESOP story directly to an elected official who visits your ESOP company is first and foremost the way to protect your ESOP, and your company.
In other words, to win for ESOPs, the Association needs members, and needs the number of members to grow. Members are educated by various methods and primarily on how to make their ESOP all it can be, and how to reach as many employee owners as possible. When the company succeeds, because of its success, its performance, its unique ownership culture, then the Association and its members’ advocacy work persuading members of Congress to continue a positive policy for ESOP creation and operation is going to succeed.
Fewer members, declining membership means less education on how to create the magic of an ESOP company that has caused elected official after elected official to learn firsthand how positive employee ownership through the ESOP model works. Less education means that the positive impact of an ESOP company dissipates, and macro research on the performance of an ESOP company declines. Fewer magical ESOP companies means fewer high performing ESOP companies as they are not tapping the reservoir of knowledge available at Association meetings and networking. The fewer companies, with not so stellar track records means that the advocacy message becomes less heard, and less impressive.
Sure these big picture messages are supplemented in the challenging times of ESOP cynics trying to denude ESOP tax benefits in the name of a simpler tax code, with lower tax rates. But the Association is not sparing any of its resources in fielding government process experts, who know the nuances of how laws are made — in other words, fielding a team of inside the beltway veterans of legislative campaigns involving tax laws — who provide intelligence that triggers timely, and targeted advocacy messages to key members of Congress by grass roots, high performing ESOP companies.
But never ever think that winning for ESOPs is about how many members the Association has, how many members move their companies to high performance, or how much advocacy messaging is done. Membership without education does not win. Education without advocacy does not win. Advocacy without membership does not win, and the circle of victory can be described back and forth on these three mega traits in as many permutations as can be done with three interconnected elements.
Remember the diagram.
August 30, 2013 • 11:06 am 0
It’s the last day of the month before a holiday which means it’s time for a link up of this month’s stories. See below for your refresher.
Joining us in Vegas? Here’s what you need to know about the Conference.
The 2013 Press & Event Planning Kit for Employee Ownership Month has been released. Download your copy today.
The August 2013 ESOP Report is available on the Association’s website.
The Outside Board Registry is a great resource for members.
We tell you how to keep up with tax reform updates.
Publications highlight: ESOP Fiduciary Handbook.
A new special education track for in-house ESOP trustees will be offered to attendees of the Las Vegas Conference & Trade Show.
Watch the tax reform update for August.
Senators send letter to new DOL Secretary regarding proposed rule on the definition of a fiduciary.
August 20, 2013 • 3:10 pm 1
July 24, 2013 • 10:45 am 1
The following is a reprint of the Washington Report column which ran in the July 2013 ESOP Report, the newsletter of The ESOP Association.The ESOP Report is a members only publication. Additional information can be found here.
It sounds repetitious, but the Association has posted on its blog, on its Facebook page, on its LinkedIn group, in special email bulletins, and wherever it can be placed, that events are shaping up in our national government that present the greatest policy threat to positive policies for ESOPs since 1989. [Some ask, what was the threat in 1989? While ancient history so to speak, in 1989 the House Ways and Means Committee had before it a proposal made by the Chair at the time, the late Dan Rostenkowski of Illinois, to repeal all special tax benefits for ESOP creation and adoption created in the tax bills of 1984 and 1986. This threat was beaten back when the full Committee adopted an amendment by former Congressman Beryl Anthony of Arkansas, aided by former Congresswoman Nancy Johnson, and this is important to note, endorsed by the Treasury Department under President George G.W. Bush, that took down the effort to eliminate special ESOP tax benefits. Since 1989, there have been occasional “disputes” challenging the ESOP community over a proposed regulation, or even a proposal modifying one ESOP tax benefit --- 1994, 1995, and 2001 --- but never a challenge to the entire ESOP package.]
But experts in the human resources profession always remind us that just as “you get tired of saying something one more time, someone is listening for the first time.”
So, the House and Senate tax committees are deep in a process to reform the Federal income tax code. They are not just talking, nor are they waiting to have the leaders of the House and Senate promise them that any tax reform bill they develop will be considered on the floor of the House and/or Senate. The Chairs of the tax committee, Congressman Dave Camp of Michigan, House Ways and Means Committee, Senator Max Baucus, Senate Finance Committee Chair, both have a process for developing legislation sometime in the fourth quarter of this year.
While they are following processes that are not typical of how major tax bills were developed in the past, the goals are the same as evident in the past — eliminate special income exclusions, credits, deductions, and deferrals in the current tax laws, take the additional tax money raised to cut the tax rates on income, personal rates and corporate rates, and in doing so make the tax code more simple, in other words, easier to follow in calculating taxes owed. [Media likes to hoot and holler that the two parties will not come together under this approach because supposedly the Democrats want to use the extra revenue from eliminating special tax laws to collect more money to lower the Federal debt, whereas Republicans want to use all the new revenue to lower tax rates. Yes, these two different views of what to do with the extra revenue exist, but there is a great deal of common ground between the two parties in the tax reform debate.]
Even though The ESOP Association has become a “Johnny-one-note” in communications with members about being engaged to tell elected Federal officials about the power of employee ownership through the ESOP model — repeat over and over after telling the good story of the ESOP company that data proves overwhelmingly that in the vast majority of instances, ESOP companies are more productive, more profitable, providing sustainable jobs controlled locally in the U.S. than non-ESOP counterparts — and in doing so, hopefully have that member of Congress be willing to say, “OK, do not harm ESOPs with misguided steps to lower tax rates when the best jobs policy is having employees be owners in their companies where they work, and also make income better for the working men and women of America.”
Stay in touch with the Association’s website where you can find all the up-to-date background materials on how to save your ESOP; watch for blog postings, and if just now getting engaged, read the blog archives; watch for YouTube video updates.
Remember, if ESOPs are harmed in the process to developing new tax law, one can spot the blame by looking in the mirror — no exceptions.
July 18, 2013 • 10:52 am 1
The July 2013 issue of the ESOP Report is now available for download. To access this month’s issue, you’ll need to sign into The ESOP Association’s website. The Member Sign In button is located at the top of the page. To get to the ESOP Report, click on Meet & Learn. A link to the ESOP Report is located on the left side menu.
June 18, 2013 • 10:34 am 1
May 22, 2013 • 9:30 am 0
The May 2013 issue of the ESOP Report is now available for download from The ESOP Association’s website. To access this month’s issue, you’ll need to sign into the website. The Member Sign In button is located at the top of the page. To get to the ESOP Report, click on Meet & Learn. A link to the ESOP Report is located on the left side menu.
April 17, 2013 • 10:00 am 0
The April 2013 issue of the ESOP Report is now available for download on The ESOP Association’s website. To download this month’s issue, you’ll need to sign into the website. The Member Sign In button is located at the top of the page. To get to the ESOP Report, click on Meet & Learn. A link to the ESOP Report is located on the left side menu.