Missouri Business Headlines

Senate hears ESOP legislation

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This week the Senate Ways and Means Committee heard House Bill 2030, which would create a new 50 percent income tax deduction on the proceeds business owners receive when they sell their companies to their employees. The bill, sponsored by Rep. Denny Hoskins, R-Warrensburg, is intended to encourage businesses to go the employee stock ownership program or ESOP route versus selling to a competitor or passing the business to out-of-state ownership.

The tax deduction would kick in if an owner has sold at least 30 percent of the business to the employees.

The Missouri Chamber of Commerce and Industry has championed the bill and Tracy King, the Missouri Chamber’s vice president of governmental affairs, testified in support.

“This was an idea that came from the Missouri Chamber’s tax council because of some of the success we’ve seen in Iowa and Nebraska promoting ESOPs,” King testified. “This is a win for both employers and employees who can profit from the success of the business. A business that sells their stock to their employees sees more growth than a regular business.”

A member of the Missouri Chamber, Burns & McDonnell, also submitted testimony in support of the legislation.

In the mid-1980s, Burns & McDonnell was owned by Armco Steel. However, Armco was interested in selling the Kansas City engineering firm to a foreign investor.

Fearing that the sale could lead to a downturn for the company, Burns & McDonnell leaders rallied to put together a bid to purchase the company through an employee stock ownership plan, often called an ESOP.

The move was successful. Since then, Burns & McDonnell has flourished as an employee-owned company. The company is currently constructing a massive headquarters expansion.

If the Senate passes the legislation, it will go back to the House for one more round of approval before being sent to the governor for signature.

For more information, please contact Tracy King at tking@mochamber.com or by phone at 573.634.3511.

 

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