Connecticut Bill Would Give Tax Incentive to Large Companies to Share Ownership

SB 1239, An Act Concerning Certain Employee Stock Ownership Plans, would allow Connecticut companies to avoid a state corporate tax surcharge if they provide at least 80% of their employees with at least 300 shares apiece for each year the surcharge applies. The state surcharge equals 10% of taxes paid and applies to companies with $100 million or more in income or companies that are part of a combined group of companies that file a unitary income tax return, regardless of income.

The bill passed the Senate Finance Committee without dissent but did not make it to final consideration due to the press of other legislation as the session ended. The bill is the brainchild of Robert Patrocelli, a Connecticut resident who started three very successful healthcare companies. Patrocelli is pushing a similar idea for large companies at the federal level. Petrocelli argues that his plan, under which employees would receive shares that could be sold after a short vesting period, would provide immediate and much-needed liquidity for working Americans. Investors in companies that do not share stock would not be allowed to take capital gains treatment on the sale of the stock, which would significantly reduce the company’s share price.