Senator Sanders Questions Treasury Secretary Regarding ESOP Proposal in the President’s 2014 Budget

by The ESOP Association | Apr 22, 2013
Senator Bernard Sanders (I-VT), a long-time ESOP advocate and a member of the Senate Budget Committee, recently questioned the Treasury Secretary, Jacob J. Lew, regarding the Administration’s view of ESOPs.

On April 15, 2013, The ESOP Association shared information with members about President Obama’s FY2014 Budget containing a condemnation of employee ownership through an ESOP in any company with over $5 million in revenue. Such a view of ESOPs is a reversal of Executive Branch support of ESOPs, both Democratic and Republican, since 1975!

(This blanket condemnation of ESOPs in companies with over $5 million in annual revenues is set forth as a justification in the FY2014 Administration budget proposal’s Greenbook for the repeal of a 1984 law permitting C corporations to take a tax deduction for the value of dividends paid on ESOP stock under certain terms and conditions. More information here.)

Senator Bernard Sanders (I-VT), a long-time ESOP advocate and a member of the Senate Budget Committee, recently questioned the Treasury Secretary, Jacob J. Lew, regarding the Administration’s view of ESOPs. He sent the question in writing on April 17, 2013 to Treasury Secretary Lew and has gone on the record asking the Administration to justify its position that only companies with 10 to 20 employees can benefit from employee ownership. This position disagrees with over 35 years of research that show ESOP companies, no matter what size, in the vast majority of instances, are more productive, more profitable, and provide locally-controlled, sustainable jobs. You can read Senator Sanders’s question for the record here.

“The ESOP community should find the Administration’s ESOP position shocking,” said ESOP Association President, J. Michael Keeling. “Not only does it reverse almost 40 years of support for ESOPs, but also, it’s counter-intuitive to eliminate an incentive for a policy that resulted in fewer layoffs during the Great Recession. It’s baffling to hear the Administration preach about creating jobs and then off-handedly dismiss a proven policy that sustains jobs.”