Minnesota Business Owner Leads Fight Against Taxation Plan
WASHINGTON, D.C., March 16 /PRNewswire/ -- The Administration's proposed
$690 million tax hike on S corporation Employee Stock Ownership Plans (ESOPs)
will close the door to workers across America from owning a part of their
company and providing critical retirement savings, according to members of the
Committee to Preserve Private Employee Ownership (CPPEO).
"The Administration is seeking to turn the clock back and again impose a
double tax on S corporation ESOPs," said David Copham, founder and chairman of
Liberty Check Printers, Mounds View, Minn., at a press conference on Capitol
Hill. "The proposal is nothing short of disastrous. Workers across America
will suffer. Their dream of owning a piece of their company will no longer be
possible."
Joining Copham to renounce the tax proposal were other S corporation
owner-employees, including: Tom Wegman, CEO of Stevens Industries, Teutopolis,
Ill., Ronald Hampton, an employee-owner of Austin Industries, Dallas; and
representatives from Amsted Industries, Chicago; Ferrell Companies, Inc.,
Liberty, Mo.; MPD, Owensboro, Ky.; Amerequip, Mequon, Wis.; and Messer
Construction, Cincinnati.
S Corporation ESOPs
Congress created the "S corporation" in 1954 to promote entrepreneurship.
The S corporation is a privately held business that is taxed like a
partnership (a "pass-through" entity), where the individual shareholders pay
the business' income taxes. Because the S corporation pays one level of
taxes, and because the administrative burdens on S corporations are also
simpler, family businesses and start-up companies that are privately owned
have generally preferred to be S corporations.
To promote employee ownership of a company, Congress passed a law in 1996
to allow S corporation employees to purchase stock in their company (ESOPs).
But there were problems because the S corporation would have been taxed twice
if it had an ESOP, but only once if it did not. "We did the calculations and
the double tax on S corporation ESOPs made them unworkable," said Copham.
Copham said Congress never intended to make S corporation ESOPs unviable
by requiring an overly burdensome tax. So in 1997, it passed legislation to
eliminate the punitive double tax on S corporation ESOPs.
But now the Administration is seeking to raise $690 million over the next
five years by overturning Congress' goal of promoting employee ownership of
companies.
"When our nation is running a surplus, and when the Administration and
Congress are working to find ways to improve the security of workers'
retirement savings, I cannot understand why this Administration is trying to
impose a new tax on the backs of our workers," Copham said. "The double tax
will suffocate ESOPs now in place and slam the door on new ESOPs."
"In my view," said Tom Wegman, "we should be encouraging more employee
ownership, not less. We should be creating more opportunities for workers to
save for their retirement and share in the American dream, not less."
The members of the Committee to Preserve Private Employee Ownership urged
members of Congress to reject the Administration's proposal that unfairly
singles out workers who own stock in their company as a means to invest in the
future.
Ronald Hampton pleaded with members of Congress to oppose the
Administration's tax proposal.
"Please don't take away something that I've worked so hard for," said
Ronald Hampton. "Having a chance to own shares in a company is a way to
prepare for the future so our families will be taken care of when we retire."
ESOPs: Engines of Growth
There are more than 2.2 million S corporations in America, involved in
virtually every industry and every state. About a third operate in the
service sector, a third in the retail trade and financial sectors, and a third
in manufacturing, mining, agriculture and other heavy industries.
Employee ownership in a company promotes higher performance and boosts
productivity. The high growth keeps our economy healthy and provides new job
opportunities for Americans. Workers who have a stake in their company work
harder and are absent fewer days. An ESOP also helps companies attract and
retain employees.
Committee to Preserve Private Employee Ownership
The Committee to Preserve Private Employee Ownership is made up of
companies that are owned by their employees and are deeply distressed by the
Administration's proposed tax on S corporation ESOPs. The Committee are a
subgroup of the S Corporation Association, which represents businesses in
nearly every state.
The Committee was established in February of 1999 by Liberty Check
Printers, Mounds View, Minn.; Amsted Industries, Chicago; Stevens Industries,
Teutopolis, Ill.; and Ferrell Companies, Inc., Liberty, Mo. More than a dozen
other companies have joined the Committee to fight against the
Administration's attempt to undo the critical employee retirement savings
programs represented by broad-based S corporation ESOPs.
For further information, please contact Stephanie Silverman or Steve
Mulder at 202-463-1819
SOURCE Liberty Check Printers
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Related links:
http://www.libertycheck.com
CONTACT:
Stephanie Silverman or Steve Mulder,
202-463-1819, or Rick Foy of Liberty Check Printers, 651-604-5436
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