CHIPs Act passes with employee ownership provisions;
other bills in the pipeline
Manufacturing: On August 2, President Biden signed the CHIPS and Science Act, which is intended to revitalize technology supply chains and manufacturing in the United States. Among the provisions are several that support businesses that want to pursue shared ownership and democratic governance.
Representative Jamaal Bowman (D-NY) worked with the U.S. Federation of Worker Cooperatives (USFWC), along with NCBA CLUSA and Ownership America, to ensure that worker ownership would be recognized as an effective economic development and wealth-building strategy. According to USFWC, the three main provisions featuring worker ownership are:
- As part of the Regional Technology and Innovation Hub Program, worker ownership development centers and associations are named as allowable partners in regional technology and innovation strategies;
- As part of the Hollings Manufacturing Extension Partnership, educationand training on worker ownership practices can be provided to manufacturing companies; and
- As part of the Regional Clean Energy Innovation Program, worker ownership development centers and associations are named as allowable partners in strategies to facilitate clean energy products, processes, and services.
“In helping to craft the language of the CHIPS and Science Act,” said Congressman Bowman, “my number one priority was to incorporate equity throughout — to create excellent jobs that can build and keep wealth in local communities. The worker cooperative model is one of our best tools for achieving that goal.”
Procurement: The National Center for Employee Ownership reports that Senators Gary Peters (D-MI) and Joni Ernst (R-IA) have introduced the AGILE Procurement Act of 2022 (S.4623). The bill includes a provision that would extend the pilot program established in the Defense Authorization Act that allows 100 percent ESOP-owned companies to qualify for sole-source follow-on contracts with the Department of Defense. This means if the ESOP-owned firm wins a defense contract, it does not have to compete for the next round of funding. If the bill becomes law, the provision would be extended to all federal agencies.
Retirement Security: Last March, the House of Representatives passed the Securing a Strong Retirement Act of 2022 (SECURE 2.0). The Senate has since passed two bills that are likely to become the basis for their version of SECURE 2.0, the Enhancing American Retirement Now (EARN) Act and the Retirement Improvement and Savings Enhancement to Supplement Healthy Investments for the Nest (RISE & SHINE) Act.
The EARN Act would partially expand the section 1042 tax deferral to ESOPs that are S-Corporations.
The RISE & SHINE Act includes provisions that promote ESOPs through a new federal grant program and require the U.S. Department of Labor to provide regulatory guidance for the valuation of ESOPs, something the ESOP Association has sought for four decades.
Both pieces of legislation advance long-standing priorities of The ESOP Association.
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