The 2023 Employee-Owned S Corporations of America (ESCA) Leadership Summit was held in February in Fort Lauderdale, Florida. The conference began with a visit from U.S. Rep. Richard Neal (D-MA). Neal is the House Ways and Means Committee ranking member and a longtime supporter of ESCA. He discussed his commitment to helping Americans save for retirement and preserving the S ESOP structure as a key retirement savings tool for workers. He also committed to advocacy for ESCA with the U.S. Department of the Treasury as the Biden administration continues to navigate international tax negotiations at the Organisation for Economic Co-operation and Development (OECD).
There also were visits by other members of Congress and media, including:
- U.S. Sen. Bill Cassidy, R-LA
- U.S. Sen. Mike Crapo, R-ID
- Michael Smerconish, CNN host
Stephanie Silverman, ESCA president and CEO, gave an in-depth overview of changes in Washington since ESCA’s September conference. Last year, Congress extended Section 1042 benefits to S corporation owners as part of SECURE 2.0, and the legislation also requires the U.S. Department of Labor (DOL) to provide regulatory clarity for the S ESOP community. Silverman indicated that ESCA will continue to advocate for the full §1042 gain deferral for S corp owners. ESCA also will continue to engage the DOL to make sure it follows through on its responsibilities to employee owners. This spring, Congress will focus on raising the debt limit, or the U.S. will default on its debt for the first time in the country’s history. Negotiations are focused on spending cuts and reforms to federal programs like Medicare and Social Security. The increasing national debt is expected to further increase over the next 10 years, and S ESOPs could be caught in the crosshairs of conversations about new revenue.
In addition, the OECD is advancing international tax reform, including a 15% global minimum tax on multinational companies with revenue of at least $850 million. The current structure captures larger S ESOPs that do business in other countries, and ESCA is continuing efforts to negotiate an exemption for employee-owned companies with the Treasury as the Biden administration works with its allies to finalize and implement the new tax regime.
Silverman also indicated that turnover in Congress is an increasingly important issue, as champions of employee ownership retire or lose primary elections to less moderate candidates. ESCA will continue to focus on new member engagement and education, with 82 freshmen in the U.S. House who are new to S ESOPs.
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