Ignore “Fur Git It” Messages

Please note, the following article originally ran as the Washington Report column in the June 2015 issue of the ESOP Report, the newsletter of The ESOP Association.

Tax Reform: With the leader of the Senate, Senator Mitch McConnell (R-KY), making it clear that the Senate will not consider a tax reform bill until 2017, when there is a new President, the media, in its usual superficial manner, says the message to America is to forget about tax reform legislation.

Well, depends on one’s perspective, and from the perspective of the media, which is selling a product, the drive is to report on what’s happening now, or what may happen tomorrow, as opposed to focusing on the building blocks of events that might be months, or even years, down the road.

But if one is interested in an outcome that will be determined to a great extent by the building blocks, even the foundational building blocks, what the Senate Finance Committee is doing, and what the Chair of the House Ways and Means Committee, Congressman Paul Ryan (R-WI), is planning to do, is important to ESOP advocates.

To explain with two references: ESOP advocates, and 99% of the readers of this column fall into this category, are very interested in the laws that encourage the creation and operation of ESOPs. Many may not be aware that the last tax reform bill, referred to as the Tax Reform Act of 1986, was not created in 1986 — in other words, it was not a “one-year” legislative activity. In fact, the first comprehensive proposal from the Administration surfaced in 1982. And in fact, the first written proposals in Congress, primarily led by members of Congress, Congressmen Jack Kemp (R-NY) and Richard Gephardt (D-MO), and Senator Bill Bradley (D-NJ), surfaced in the late 70s and early 80s. (People forget that upon taking office, President Carter put to the Congress a tax reform bill that led to a big tax bill, but it was not a true comprehensive tax reform bill).

Second reference point to illustrate that ESOP advocates are not to forget tax reform until 2017. In the first quarter of 2014, the then Chair of the House Ways and Means Committee, after months and months of review by subgroups of the Ways and Means Committee, published a real comprehensive tax reform proposal. In prior years, when a leader, be it the President, or a chair of one of the Congressional tax committees, released his “first” version of tax reform legislation, that proposal becomes the foundation, the first building block as it were, for the final structure. Yes, the final building does not look like the foundation, but it has a foundation that determines many, many aspects of the building’s look. The Camp Tax Reform proposal will still have many of its details in any bill adopted in 2017, or ever later.

What to Do? The ESOP Association’s Washington office continues to monitor, keep an eye on the sub-groups of the Senate Finance Committee that are reviewing tax laws that relate to ESOP creation and operation. The goal is to ensure the positive record of ESOP companies — particularly in having a record of sustainable jobs controlled in the United States — is known by key Senators and their staffs; but most important is to be ready to let the true power behind ESOP laws, ESOP companies and their employee owners, stand out when intense messaging is needed. But, the easiest, and in conjunction with keeping ESOPs front and center in the minds of women and men in Congress is to push for Representatives and Senators to co-sponsor H.R. 2096 and S. 1212 respectively. (For details, Advocacy Kit, or watch Spring Advocacy Kit Intro and Why You Should Invite Your Member of Congress to Visit Your Company.)

In other words, do not take a vacation from making sure those who will eventually decide on tax reform laws know why ESOP laws should be continued and expanded, by using pro-ESOP bills as the tool to make the case for ESOPs, and to have elected officials declare openly a pro-ESOP position.

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