The ESOP Association today expressed strong opposition to an element of the Administration’s Fiscal Year 2017 recommended budget, which would eliminate an incentive for public companies that let workers own part of the business via an employee stock ownership plan (ESOP).
Since 1985, individuals who work for a company that offers an ESOP have avoided double taxation on the dividends they receive. The Administration’s proposal would eliminate that incentive, thereby hurting companies and employees alike.
The current Administration has offered this provision each year it has been in office. This track record is surprising given that employee ownership helps achieve exactly the kinds of economic results the Administration seeks, says J. Michael Keeling, President of The ESOP Association. "The evidence in favor of employee ownership is overwhelmingly persuasive,” says Keeling. “Companies with employee stock ownership are more productive, more profitable, and provide jobs that are more sustainable than companies that are conventionally owned.”
“For over 30 years, Congressional tax committees have examined this incentive, which encourages American businesses to turn employees into owners. And each year, those committees—which are, by definition, bi-partisan—determined that avoiding double taxation on ESOP dividends is too valuable to be weakened or eliminated.” Congressional support for ESOP tax incentives continues unabated today.
“Congress has rejected this proposal from the Administration for eight years, and we expect the same result in 2016,” said Keeling.
Click here to see more on the ESOP Association's website.