Advocacy Victories 

The ESOP Association, which is the only organization advocating for all ESOP companies, has a long and successful legislative history. Here are some of the key wins The Association has contributed to through the grassroots advocacy efforts of its members.


The Main Street Employee Ownership Act is signed into the law, as part of the John S. McCain National Defense Authorization Act for Fiscal Year 2019. The law makes it easier for small companies to use the Small Business Administration’s 7(a) program to finance a transition to an employee-owned business, such as an ESOP. The law was championed by the office of Sen. Kirsten Gillibrand (D-NY), which worked closely with The ESOP Association.


Despite strong pressure to find ways to pay for a new tax cut, ESOP tax benefits remain untouched, thanks to efforts by The ESOP Association and its partners.



The Department of Labor proposes regulations that would make advisors to ERISA plans—including ESOP appraisers—fiduciaries, under ERISA. The Association and its members reach out to supporters on Capitol Hill and ensure the new regulations would not adversely affect ESOPs.



The ESOP Association, working with other major employee benefit groups, play a major role in Congress enacting law that make permanent many EGTRRA provisions that benefit sponsors of defined contribution plans, such as ESOPs.



The ESOP Association, working through a nationwide grassroots program, stops efforts to limit the tax benefits of S corporations sponsoring ESOPs. Instead of losing benefits, Congress approves an initiative by The Association to expand the tax deduction paid on ESOP stock.

Various pro-ESOP proposals become law upon Congressional adoption and the President’s signature of the popular ERISA reform legislation, known as H.R. 10, Portman-Cardin, which is included in the New Tax Law. In this work, 80 percent of the members of key tax committees in the House and Senate take public positions that support ESOPs.



Leading a concerted lobbying effort, The ESOP Association persuades Congress and the Administration to improve the 1996 Subchapter S ESOP Law, so that beginning in 1998 it becomes advantageous for Subchapter S Corporations to sponsor an ESOP.



Work on the 1989 deficit reduction bill raises several proposals that would stop the deduction of dividends paid on ESOP stock. The ESOP Association successfully lobbies to preserve the deductibility of dividends.



The ESOP Association lobbies to improve 1984 legislation on ESOP incentives by, for example, allowing the deductibility of dividends on ESOP stock paid to plan participants and the deductibility of dividends used to pay debt. The ESOP Association’s positions are included in the Tax Reform Act of 1986.



The ESOP Association lobbies for several major tax incentives for ESOPs, all of which become law in the 1984 tax act (DEFRA). Benefits gained include:
  • Deductible dividends paid on ESOP stock.
  • Tax-free rollover for gains on stock sold to an ESOP.



The Association successfully lobbies for 25 percent of pay, plus interest, as a special level of deductible contribution to leveraged ESOPs. This proposal becomes law in the 1981 tax law (ERTA).