The following article originally ran as the Washington Report column in the October 2014 issue of the ESOP Report, the newsletter of The ESOP Association.
If you’re joining The ESOP Association at the 2014 Las Vegas Conference & Trade Show at Caesars Palace this November 13th and 14th, there will be an election wrap-up by ESOP Association President, J. Michal Keeling, at the Friday Lunch: November 14, 12:15 pm – 1:45 pm, Palace Ballroom.
Use Time Wisely: Think Elections
It is a waste of time to talk about what Congress may do in its lame duck session after the November Mid-term elections. Who knows, as crisis after crisis is exploding, and what next week will require is unknown, much less what will be the focus of Congress in November and December.
But, with members of Congress, the vast majority running for re-election, some in tough races, some not, moving around their districts and states, it is a perfect time to have your Congressperson, or her/his staff, or Senator, or his/her staff, come visit, or to interact at a local event, or to send a letter, or if you have contacts in her or his office, an email, asking that s/he co-sponsors H.R. 4837, the House pro-ESOP tax bill, or S. 742, the Senate pro-ESOP tax bill.
The track record is clear: Since 1990, on advice of the then leading champion for ESOPs on the House Ways and Means Committee, as the ESOP community came out of the 80s with a tax bill nearly every year, often reducing ESOP tax benefits, said to ESOP leaders: “You people need an offense; remember the best defense is an offense. I will introduce each Congress a pro-ESOP tax bill, bi-partisan, so we get members to say that they are “for” ESOPs, sending a message to those in the government and on Congressional professional staffs that are ESOP cynics, that if you want to hurt ESOPs, you will have a tough fight on your hands.”
So, each Congress, since 1990, the ESOP community has been able to go to members of Congress to get them to declare that s/he is for employee ownership through the ESOP model, and it is clear that when literally 100 and sometimes more, many on the tax committees of Congress, make it clear before the tax committees begin work on reducing tax benefits in order to lower tax rates, those with a knife out for ESOPs say, “Why take on a task and lose?”
A more colorful comment by a member of Congress some years ago who still serves on the House Ways and Means Committee when S ESOP advocates protested the proposal in 2001 to apply a corporate income tax on the ESOP’s share of its S sponsor’s taxable income, he said, “I learned a long time ago not to step on that ESOP snake!”
His remark was basically saying that the pain from other members not liking any negative action against ESOPs was not worth the amount of new tax revenue gained by squeezing ESOP companies and employees to pay more money.
“Stay with it” is the motto for now, and for the next two months, if your member of Congress is not a co-sponsor of H.R. 4837, or S. 742, ask; do not be bashful.
And the Election: For years the holy grail goal for ESOP advocates has been that some day, just some day, there would be ESOP voters, who would vote, or at least have a major reason for their vote, on how the candidates stood on ESOPs. The ESOP community is not there yet, but….
There is growing evidence from Association members that they do care how candidates stand on pro-ESOP policy — not big evidence but evidence. Take a look at the list of pro-ESOP men and women on the Association’s website: http://www.esopassociation.org/advocate/advocacy-kit/esop-advocates. First, see if your Congressperson or Senator is on the list. Then take note if s/he is in a tough re-election fight. Then think about how you will vote, in accord with your values, and your personal and company’s benefits from the ESOP, and put that into your calculation about how you will vote.
Your vote is your business; the Association respects how you vote, but thinking ESOP when you vote is not wrong; it is right.