– Legislation sponsored by Representative Daryl Metcalfe (R-Butler) to further enhance the many benefits and advantages that Employee Stock Ownership Plans (ESOPs) have for Commonwealth family-owned businesses, employees, communities and the economy was adopted 130 - 67 by the Pennsylvania House on Wednesday, Dec. 18.
House Bill 285
would put Pennsylvania on par with 48 other states by applying certain provisions of the federal tax code at the state level and allowing certain business owners who sell their stock to an ESOP to indefinitely defer and possibly eliminate the capital gains taxes normally collected at the sale of the business.
“ESOPs serve the dual purpose of delivering real retirement savings and stock ownership for employees, as well as the potential of a tax-free exit strategy to keep businesses in Pennsylvania,” said Metcalfe. “Additionally, employees contribute absolutely nothing out of pocket or paycheck for this outstanding benefit. The purpose of my legislation is to increase the incentive for family-owned businesses and other employers to sell their business to an ESOP rather than outsiders whose intentions are unknown.”
According to the National Center for Employee Ownership, ESOP-owned employers are 25% more likely to stay in business and ESOP employees have 2.5% greater retirement account balances and earn 5%-12% more in wages.
There are dozens of ESOP companies in and around Butler County and the greater Pittsburgh area that are either partially or fully employee owned, including Nicklas Supply Inc., KTA-Tator, Silver Star Meats, Tech Met and Thermo Twin Industries.
There are roughly 6,000 ESOP companies nationwide and 300 ESOPs across Pennsylvania, including Dansko, Hoss’s Family Steak and Seafood, McKean Defense Group, Sheetz and Wawa.
House Bill 285 now advances to the Senate for consideration.
Representative Daryl Metcalfe
Pennsylvania House of Representatives
Media Contact: Ty McCauslin