2009 State of the ESOP Address

Not All Gloom and Doom shares the remarks delivered by the ESOP Association president J. Michael Keeling at the 2009 Las Vegas Conference. He discussed his assessment of ESOP support within the Obama administration:

I also said, without hesitation that day that there are no ESOP fans in his inner circle of advisors, and their view of employee ownership through ESOPs seemed to be shaped by United, Enron, WorldCom, Bear Sterns, Fannie Mae, and so on. And while ESOP fans like to holler that not all of the negative stories arising from the collapse of these companies and their stock value involved ESOPs, in some form or fashion, company stock ownership, direct or indirect, was broad-based in these companies.

One year later, I have not changed my view of the key persons in this Administration.

He also reiterated that we are likely to see a repeat of the tax policy of the 1980s:

[Here, Keeling talked of the similarities between the goal to lower the Federal deficit after the 1981 tax cut bill, and the 2009 large spending increases, as in the 80s, when both Republicans and Democrats dedicated their work to raise Federal revenue to lower the Federal deficit.]

So what happened? After the largest tax cut bill in the history of the nation in 1981, within one year, the Congress passed and President Reagan signed the largest peace time tax increase bill in 1982. And there were tax increase bills in 1984, 1986, 1987, 1989, 1991, and 1993 before the tax increases let up.

These bills did not raise tax rates, but instead raised taxes by eliminating, or restricting so-called corporate tax loophole, both corporate and individuals. And what do the ERISAcrats think of ESOP tax benefits that spread the ownership of assets among employees? They view ESOPs as wasteful and not needed, and even "evil" corporate and individual corporate tax loopholes that promote bad retirement savings policy.

In the 80s, with each tax bill, the ERISAcrats put on the table the ESOP tax benefits for elimination, or cutbacks.

He also discussed how the ESOP community is much stronger today and the key to maintaining pre-ESOP policies:

Despite the economy, the Association, and allied organizations that did not exist in the 80s are bigger, with more resources, more key friends in Congress, and with a more entrenched grassroots network promoting employee ownership through ESOPs with members of Congress.

[Here in the remarks Keeling reviewed pending pro-ESOP legislation, and the influence supporters of the pro-ESOP legislation had in Congress. Details about the legislation can be followed in prior newsletters, e-bulletins, and on the Association's website under the Government Affairs link at the top of the page.]

Key to winning is exposure of your ESOP company in your community. While the Employee Ownership Foundation is making inroads in spreading pro-ESOP facts in academia, and among the nation's think tanks, what is visible in an ESOP company makes the biggest impression on a member of Congress.

Yesterday we discussed Congressional Support for S Corporation ESOPs. Last year we discussed the 2008 State of the ESOP Address. All of our ESOP governmental posts can be found by accessing the legislation label and additional information about current ESOP legislation can be found on the left-hand sidebar of this Blog.