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.