The tax provisions of the Biden administration’s American Families Plan would provide a substantial, if unintentional, boost to employee stock ownership plans (ESOPs). The proposal would significantly increase capital gains taxes for wealthy individuals, marginally increase the top individual tax rate, and increase the top marginal corporate tax from 21% to 28%.
California Republican Senator Scott Wilk has introduced SB-553, which would provide 100% ESOP-owned companies with a 3% bid preference on state contracts.
Under current regulations, companies traded over the counter are considered closely held for ESOP purposes. That means they have to comply with valuation and diversification requirements not applicable to public companies.
Barbara Boxer (D-CA), Mike Enzi (R-WY) and other Senators have introduced the "Stock Option Accounting Reform Act" to limit the implementation of stock options expensing rules by the Financial Accounting Standards Board. The bill would:
