Three members of the Senate Finance Committee have introduced a bipartisan bill to expand employee ownerships of private businesses, a goal they say could help create more jobs and spur more economic activity.
The bill, introduced by Democrat Ben Cardin of Maryland and Republicans Pat Roberts of Kansas and Olympia Snowe of Maine, is designed to eliminate some barriers that companies and their owners now face in establishing single-tax corporations, or S corporations, with employee stock-ownership plans (ESOP).
According to some studies, ESOP companies return more on retirement savings, have an easier time accessing capital, and tend to weather downturns in the economy better than most businesses.
The senators said their bill, the Promotion and Expansion of Private Ownership Act of 2011, would allow more S corporations to expand or transfer full ownership to their employees. A similar bill has been introduced in the House and is co-sponsored by 18 Democrats and 18 Republicans.
“S ESOPs have proven resilient even in tough times — hiring new workers as other firms were shrinking — while also providing an effective means of retirement savings for their workers,” said Cardin. “We need to preserve and expand this structure to enable more businesses to grow and to allow their employees to accrue these valuable benefits.”
“This legislation supports a simple but powerful premise: when employees own the company, they operate with a vested interest in its success, and that in turn generates tremendous returns for the company, the community, and the economy,” added Roberts.
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