EP33 – ESCA - Interview with Noelle Montano – ESOPs and Washington

In this episode, Noelle Montano returns to discuss ESCA’s tireless efforts to preserve and promote the S-Corporation ESOP in Washington after the 2024 election. We also discuss some of the impacts employee ownership has on companies, communities, and Congress.

Transcript

[0:09] Welcome everyone to this episode of the jury 2 and ESOP and Beyond podcast I'm Jason Dillard the director of secession planning for Birmingham Hopkins, hopefully you've seen me before my guest appearances on the podcast but if you have that I'd encourage you listening to those episodes from earlier in the season after this phone of course.

[0:29] Uh the mission for the journey to an ESOP and Beyond podcast is to make information about esops or employees stock ownership plans excessively and understandable and if if I might add digestible. If you've been listening for a while then you know that there's never a shortage of topics to discuss or facets of this gem we call an ESOP to discoverand so. We're very glad you joined us today and I believe that you'll find both a resource and you'll learn a lot about politics surrounding esops through the conversation with our guest today Noel Montano the executive director of esca, the employee and escorts of America.

[1:10] No I was sent her career as an attorney in politics and leading efforts in Washington for esops for over 20 years and she's also been a guest on the podcast before. And yet somehow she's escaped the tradition for new guests uh so we're we're going to fix that now. Uh novel before we dive in to our topic in Earnest and this is a little bit of a surprise but it's customary for our guests to share their favorite movie and why it's their favorite so the audience gets to know you a little better and you get to share something important or meaningful to youoh my goodness Jason you didn't even prep me in advance so I have to be. Off the cuff so if I am going to say well it is the Christmas season so, um do I get 2 picks I'm going to say for a Christmas movie Love Actually is the 1 that I have to watch every single year.

[2:02] Um and then I'm gonna go with Wicked that I watched over Thanksgiving um while it's only half of the Broadway show I did think it was fantastic and a great message for everyone right about friendship to find gravity and being empowered um to you know be with be what you should be which should say going nicely into esops right that's fantastic so I do have to ask on on that for for Wicked are you gonna go back to the singalong show. Not not a good singer so the only singing was in the in my house it when I'm alone and in the car of course belting out the songs by myself.

[2:42] Very good very good thank you for for both answers so you made up for for having to escape at the first time and then now now we have both so.

[2:51] As as we move into the topic how to frame everything up for for today's conversation. Uh first if there's anything additional that you'd like to add to to our audience uh about yourself. And then uh please remind us of of asked his mission and your purpose and kind of how your team deploys in order to preserve escort BC.

[3:13] So that sounds great so just a little bit more color for my background I did start my career in Washington in the 90s I worked for Congressman Bill Archer from Houston Texas it was pure luck on my part that he was my hometown member and he was actually the lead Republican on the house Ways and Means Committee which is the tax writing committee where all tax bills originate so again very very lucky to have grown up in Houston and when I thought oh I'd like to be in DC working on Capitol Hill that he was my member so I actually was working for Congressman Archer when he was chairman. And writing the 1996 small business jobs protection act and that is the law that created the structure of the S corporation ESOP that strange marriage between a pass through entity and a retirement plan, I was too Junior on the staff at that time to even know that it was happening so I had no idea that in that 1996 tax bill with something that I would be dedicating my career to for more than 20 years.

[4:16] So when I did join ASCA in the early 2000s, Esco is a very new organization because it was formed right after S corporation esops became effective which was J 111998 and I do want to remind your listeners that Congress intentionally created this unique structure. To encourage retirement security and employee ownershipso to very clear. Lofty you know important goals and umEsco was formed soon thereafter by a handful of companies that recognized this new corporate structure is going to be critically important to their future to their employee owners and ensuring that Congress doesn't change it so I think that's really important to think about that whatever Congress creates no matter how good it is. There could be inadvertent or there could be intentional changes to this structure so since that time in the past 25 plus years of S corporation esops Esa has grown to more than 200 member companies from across the country.

[5:27] And as you all know they come in all shapes and sizes there could be 50 employee owners there could be 50,000 employee owners. Um the predominant Industries are construction engineering. Contracting Old Line Manufacturing there's some well-known brand names like Bob's Red Mill and Wawa a lot in this service industry as well but I um you know it's great that they're all across the country and all sorts of Industries.

[5:54] I think that's a she uh idea around the the how deliberate the creation was and that it wasn't something that was found in between the lines of of Co overall uh that someone took advantage of and I think that that that speaks a lot uh for their their intention to make something good for workers. Uh that is going to prepare them well for their future and I think we all know that that esops are a great way to prepare that way. The prepare that future for for workers um it it seems interesting this is a point that I wanted to bring up um and.

[6:35] That Congress as a whole how how how are esops viewed. I mean we're at the end of 2024 I think that we've all had an election season that's left us all really glad that it's over. For another uh and in a largely partisan electorateI'd like to think that, all right I do think that there aren't many topics that everyone agrees on but but let's talk about where employee ownership Falls in that spectrum that that kind of partisan Spectrum. Right and I think it's due to the more than 25 years of Esa member companies and Esa and other members of the ESOP community. Educating policy makers making sure that members of Congress understand what S corporation esops are. Have met with employee owners and companies in their District. So that they have that face of employee ownership and understand the jobs that are created the retirement savings stories that they hear from constituents. About you know because of my job and because my retirement was Secure. Through an ESOP I can say for my kids to go to college I can provide for this um some really really poignant important stories, often from they could be first generation Americans they could be um.

[7:49] Individuals that are able to send their children to college when they didn't go to college we have working-class Americans they're saving for a real retirement. And that's going to resonate across the political Spectrum so I think that is the beauty of esops that you are referring to is that in a way we can transcend the political dialogue and the. You know the differences that are so apparent on so many other issues between the parties, but whether you're the most Conservative Republican somewhere in the middle the most Progressive Democrat.

[8:23] There is something to like there is something to be encouraged by there's something to be proud of. With respect to employee ownership and retirement savings. So regardless of who is in charge of the house the Senate the White House we have such a positive message to share and it's not only the personal stories, but there's tremendous data out there about how ESOP accounts could be twice as big as a 401k. Or even for workers I mean 50% of American workers go to work every day at some place that's not providing any retirement account which you know is really really disturbing and of great concern and if you work at an ESOP company chances are in addition to your ESOP you have another retirement plan that you can be putting your own savings into so when we share data like that. Um about how employee owners are more financially educated they're more aware of what they should be doing they tend to stay in their jobs longer. The data combined with the you know the personal stories is incredibly powerful and it resonates.

[9:31] No absolutely there are 2 things I want to pull out of that the first 1 is toward the end and we'll go back to the beginning, uh so that yeah we have a lot of clients that that we work with to set up esops that asked that question throughout the process related to we have a 401k we have other benefits should we leave that in place do other ESOP companies leave that in place when we move. Uh into this this new stage of of of our life cycle um and I I think uh the statistic for and you can correct me if I'm wrong for escorts is that somewhere around 90% or so at at both plants right is that's correct.

[10:10] Yeah um and then back to the beginning you said uh educating our uh our Congress people around esops and that that seems like for a really tall order and a tough job and glad that that I think that that's your job uh and not mine so talk to us a little bit about what that looks like because Congress has the uh the opportunity someone called an opportunity to change every 2 years so every every rep in the house is up. And then on those sliding scale for for the Senate now you're having a third of them turn over every elections.

[10:50] Exactly now that's a great point so that means there's always new members to educate so that they understand when an S corporation esap is and have met um with employee owned companies that are from their District or state and also at the highest level.

[11:06] The members that are writing tax or retirement policy legislation they could be changing we every year will every election cycle lose important Champions like with this cycle. Senator Ben Cardin who has been an Ardent retirement security policy leader and Ardent ESOP fan um and champion of ours a lead on legislation that we have promoted he is retiring so not running again and then Congressman Earl blumenauer from Oregon was the Democrat lead on legislation that Esa works with a bipartisan group of members of Congress on um to encourage more more employee ownership Congressman Blumenau has chosen to retire so it's a continuous process so I mean we so we can't ever let up basically the foot is always on the gas in terms of having a presence on Capitol Hill with the White House with the related agencies to ensure that they understand this very positive message and I think that's another thing that's important that differentiates our conversations about employee ownership from other organizations that are advocating for different causes is that we are coming to Congress not saying you did something wrong you better fix this you better clean this up we're having these you know major problems because of a law that you passed. We're coming in with a very positive message of you did something right when Congress created the S corporation ESOP.

[12:36] You did something incredible and more than 25 years later we have these stories that I referred to and the data, that will show you how important this is and even members of Congress that were not in office in 1996 and there are not many that are left at this point Point um that we're not there they kind of stand up a little bit straighter are they smile and they're like wow like we did something good and so then it's easy to follow that on with and so it's so important that you continue especially if you're on a tax writing committee especially if you're on house Ways and Means or Senate Finance. That you be mindful of any policy changes that could impact pass through entities so s corporations. Or retirement plans.

[13:21] Because after 25 years there aren't members of Congress that are skeptical or saying I don't know about these S corporation esops maybe we could scale them back and pay for something else do something a little bit differently. It would be solely because it's an accident an accident happened right people I mean the tax bills that are getting passed are thousands of pages long. 100 Provisions right they're looking at individual tax rates they're looking at corporate tax rates we're looking at credits and deductions. If there's a retirement policy section of that bill it could inadvertently. Touch as Corporation esops so then it becomes imperative that Esa has those relationships with a handful of members of Congress who are in the room. Writing the legislation at that time to ensure that we're able to communicate this could adversely impact a private employee on company. And by extension this hurts the employee owners. And their retirement accounts and that is not at all what you intended to do when you created this model and so really we have to be on our toes because when we get into a big tax year like 2025 will be.

[14:32] Um things are going to be moving quickly again there are issues just tax issues that members will be looking at, and if there's going to be a problem for S corporation esops we need to have the access the relationships to get them fixed before that bills considered in committee.

[14:50] Once it gets out of committee and it's going to the house floor of the senate floor it's very very difficult to get anything changed so that's why we will say that Esa is the eyes and the ears and the voice for employee owned company so that they can focus on what they do with their building with their creating with their designing with their selling we're here in Washington as the insurance policy looking out for their SE substructure and their employee owners.

[15:18] Such an important cause and and advocacy that that you guys do uh in that regard because just listening to you share about having to to constantly be on the bubble uh with. That every member and then those members are are always the same people uh you you mentioned a lot around those committees that are more or most important to to esops and the work that you do so I imagine. Um that not only do you have new new Congress people coming in during every session.

[15:51] Um but also the there's the shake up on on those committees but are are there any stable elements of either the the seat or the office uh or or the committee themselves that make it easier for you to get new members to Congress and new members of the Committees up to see.

[16:10] Sure well the leads of the tax writing committees didn't change this cycle so chairman Jason Smith republican from Missouri will again lead the Ways and Means Committee. And Congressman Richie Neil a Democrat from Massachusetts so again be the lead Democrat on the house Ways and Means Committee. These are members that we have worked with I mean Congressman Neil more than 20 years. Um Congressman Smith before he became chairman was actually the lead Republican most recently on our bill to promote more S corporation esap so there's stability there at the top. Senate flipped control so Democrats currently control the Senate Republicans umwill control, the Senate Finance well all committees in the Senate um we'll have the majority in the Senate and the new Congress the heads of the Senate finance committee the Democrat is Ron Wyden from Oregon. Big fan of esops and then Senator Mike crapo from Idaho is the Republican who will become the chair of the Senate finance committee we have worked with both senators crapo and widen, for many many years um Senator crapo spoke at our, July conference this past year and he was still reminiscing about his visit to 1 of Our member companies where he got to crush a car and talk to employee owners so things like getting a member out to your.

[17:29] Alter your company really are what's going to stick with them it's kind of you know seen again what you make what you do putting a hard hat on and visiting with the employee owners. But um Senator crapo once mentioned a few years ago I was probably when they were working on the 2017 tax bill. Key along with Senator shared Brown a democrat from Ohio who unfortunately lost his re-election he is a big big fan of esops and a champion of ours on the committee. Senators crapo and brown at the time back during the 2017 Bill were tasked with looking at a certain section of the tax code I think maybe passed through um and Senator crapo kind of quipped he said I think esops might be the only thing that the 2 of us can agree upon and I think he was kidding I think there's got to be you know more things that Senator crapo and brown can agree upon but again it just shows that you know if you're either into the political Spectrum. ESOP spring people together and that is such again such a positive message in these very turbulent political times.

[18:32] It's really helpful and and always uh a fun thing to to listen to these these stories between politicians and the normal battle and they they can't be honest right their friends in some respect or at least respectful colleagues um along the way we we like to imagine.

[18:51] Exactly and going back to something else that you mentioned yes there will be new members on the Senate finance committee and on the house Ways and Means Committee so that's part of escos job in terms of looking forward is. Which members will replace those that have either lost lost their re-election race or um or have retired so. I think the Senate finance committee will have 5 new Democrats potentially 4 or 5 I think. 5 will no longer be there in the new Congress and that's a lot I mean that's that's about 1 third of the Senate Democrats and the finance committee and then on the house Ways and Means Committee there was only 1 loss on the Republican side but several retirements on the Democrat side. Those will be new members to educate but um.

[19:35] You know we're building a pipeline of allies right just introducing them to the concept of esops um introducing them to our companies but what we need are champions who are in the room because when the bills are actually being written it's not the whole committee. It could be just you know the top 5 Republicans writing it.

[19:53] It it sounds like um 1 thing I want to go back to in you know the last exchange uh around the the impact of the employee owners on the congressmen because of their visit. Um and uh it sounds to me like that that's a way to go to get more allies uh in in Congress right is making those connections um with with companies uh and and their Congress people is.

[20:24] Uh how important do you think that is uh and then H how can we facilitate that or how can your member companies facilitate those those introductions.

[20:36] We have a very active District visits program we do about 50 to 60 per year primarily with members of Congress but sometimes their senior staff come out for a visit if the member isn't able to come so that is a service that Esa offers to Our member companies in terms of connecting them with their member of Congress and Staffing the visit with the prep work but it also helps us as Mission too right so it's mutually beneficial to us to have our member companies have their member of Congress out and I think what is most compelling is that we'll care members of Congress say I walked into this employee on company I felt the difference like I really it's something that tangible that they feel as they're talking to employee owners and see the pride and the work and I think it just you know it exudes from the employee owners as they're talking about their experiences.

[21:29] At the company and we love it when we hear somebody say yeah I'm a short-timer here I've only been here for 25 years as opposed to my colleague that's been here for 35 or 40 years and I think members of Congress learning more about the contributions that these companies make not only to the local economy but a lot of these companies are because of their just commitment and they're feeling the employee ownership spirit. Very active members of the community so it's not only that they have workers that are living in the community and paying state and local taxes and supporting local businesses a lot of them are involved in local charities you had a little local Little League team and things like that um I think that all just comes from the spirit of employee ownership and members of Congresswhen they go in person they feel that they learn about it, and that really helps build investment so as many members as we can get out to see our company members is always a great benefit and educating them and then we do Lobby days throughout the year where we bring employee owners to Washington DC um if we're not able to get a member of Congress out to their District to see our company we will come to them so, we'll have a team from say Florida going to meet with the Florida delegation and when members of Congress for the first time. Are meeting with say 4 to 5 employee honors all from different companies but they hear those common themes.

[22:52] That really resonates too like okay you're in totally different Industries you're throughout the state of Florida, but you all are talking about the employee ownership kind of the spirit of it the culture of your workplace the tenure of employees and how committed your company is, to their Workforce both with Benefits the ESOP and even just looking at for each other such as during the pandemic.

[23:18] It's 1 thing to explain but it's another thing to experience that Spirit of employee ownership that you mentioned. And I I think uh you know getting the privilege of working with with ESOP companies from the last number of years it's very easy for me to articulate why I chose to to remain in in this segment in this industry. And this community once you get in uh because it is it's contagious and there is something very unique about it and the the way that you know sometimes I've articulated to people you know the type of company. When you walk in the door and the way they treat their people and the atmosphere there is something tangible there's something different uh and and that, that difference is what what may be what sets them on that that journey to to sort of exploring becoming an ESOP or once they're there just reinforces the reasons thatit is powerful in a bunch of. And that helps the company Prosper too right I mean it it all it all goes hand in hand.

[24:23] Absolutelyso you you've mentioned that there's there's a lot of it's an exciting tax year 2025 will be an exciting tax year right so that the tax cut and jobs acts right that's that's something that's that's likely to be taken up or will be taken up uh in this this next Congress uh and I'm sure there's a slew of other things that that's out there.

[24:45] Um Talk to us a little bit about how outside of Congress but within our regulatory bodies the Department of Labor and the IRS specifically uh what your relationships uh at eska look like with our Regulators uh maybe talk a little bit about that, sir in addition to working with Congress it is very important that Esa engages with our Regulators which are primarily Department of Labor a little bit with treasury a little bit with IRS. Um we've been working with the Department of Labor for more than a decade the seop community has been an ongoing conversations with the Department of Labor about the need to establish guidelines with respect to valuation of ESOP companies and that's really a risen from some I would say fairly. You know a lot of Investigations and Audits and lawsuits that the Department of Labor has undertaken um looking into transactions for employee and companies and our concern as we hear about how lengthy they are how it's really really hard to get some of these investigations and audits wrapped up a company's up company might provide you know every single email that they've had for the past 4 years, all of their bank records and department of labor staff looks at it and it's like oh thank you very much for all of this we'll be back in touch in about 18 months and.

[26:07] You know that's resources for an employee on company that's you know paying lawyers that's taking time away from running and growing the business and that ultimately impacts the value of the company and therefore the employee owners it also impacts you know some of your clients probably who are looking at, hm I really would like to transition my business to an employee owned company but I've heard rumors the Department of Labor is going to come audit me I'm going to get tied up in litigation for the next year. Um being accused of an unfair valuation that I got too much money for selling. My business and that will chill the marketplace right I mean esa's looking for new ESC Corporation esops to be created not for business owners to be discouraged so.

[26:55] We have taken um an approach of trying to be a resource to the Department of Labor. In addition to company members we have professional members such as yourself who are advisors to ESOP companies whether it's the valuation experts. Trustees bankers lawyers you all are very important members of our community for your technical guidance. And for introducing us to you know the companies that you transition to employee owned so we work closely with our advisor members. To provide technical guidance to the Department of Labor.

[27:31] In terms of this is how we think evaluation should work these are some things you should understand about the use of warrants or SARS things like that that can get very technical and very weedy. We also do work with members of Congress that have jurisdiction over the Department of Labor so that would be the Senate.

[27:49] Health education labor and pensions committee known as the health committee, 1 of my friends who used to work on the hill said without pensions it would just be the health committee so we love that pensions are involved. Um and then on the house side it's the education and Workforce committee and those committees do oversee the Department of Labor, so the S the ESOP Community worked in conjunction with those committees to have legislation included in an end-of-year package I must exactly 2 years ago that requires the Department of Labor to issue adequate consideration or evaluation.

[28:28] Regulations so that was kind of the final push that the community's been asking for this for a long time now Congress is directing we're no longer asking there was not a deadline put on the issuance of those regulations but I can let your listeners know as they may already know that there is a draft rule. It has not been released publicly it's currently at the Office of Management and budget. Esca and other employee ownership organizations are meeting with OMB just to have some discussions department of labor staff. Participates in those meetings it's typically a listening session on their part. As we're able to convey some points that we want to make um I think we could see the proposed rule come out before the end of the year I think there might be some urgency given that the administration will be changing in January. To say check the box even if we didn't get this finalizedwe got it out.

[29:25] But I do want to say on the other hand in that end of your package from 2 years ago Congress also directed the Department of Labor to open an office of employee ownership.

[29:35] And that's been very very encouraging to aska and the ESOP community that there is a point person there to take in feedback such as oh we are concerned about these investigations or even.

[29:50] On the other side of. Positive Outreach to employee owned companies and we have seen that from this Administration and it is been so appreciated that the assistant Secretary of epsa Lisa Gomez she has made a concerted effort for herself and for her team to visit employee on companies.

[30:12] And if you likely have heard what Lisa's remarked is well gosh we only knew about Baddie sauce because employees would call it since they we've got a problem here and now that I've visited these companies it's similar to a member of Congress right the company um so we are really really grateful for her efforts. Um and I'll also add that this Administration in my 20 plus years of doing this has been the most Pro employee ownership of any other Administration back in July. The White House hosted the first ever convening on worker ownership. First ever after all of this time um you know leader Lisa Gomez was their leadership from the small business administration was there. White House staff and then all of the outside interested parties. Um we're there and we really hope again back to the message of esops transcending partisan, politics that there will be a place in the new Administration, to talk more about employee ownership and it should resonate with the new Administration maybe in a different way but just as much as it has resonated with this Administration.

[31:22] Just underscores how uh how appealing. The concepts and brief of concept is to to all parties really uh and. Uh that stride has been taken for that office and those appointees and hopefully that conversation does continue in that way uh because I think it's going to be vital to the expansion, I I hope that.

[31:46] Um so I get asked a lot are people interested in esops right like how is it is it happening and I I always say anecdotally because I don't know everything.

[31:56] I've had more questions regarding esops in the last number of years incrementally more each year that goes on and I think that's the sentiment from the community but so many great things are happening in Washington. Uh to to support that and I think that that comes directly from your efforts and again going back to 1 of the comments that I made earlier I'm I'm glad that that you and Esa are performing that function on behalf of of a community that that's out here in the day-to-day because that partnership. Really needs to continue and Thrive so that everyone continues to win so workers continue and and we we keep moving through where we are in the landscape to get more companies to consider employee ownership, and and make that that transition when it's good for them and it's good for the workersI think enthusiasm is building I feel it too I think there's more in the Press about esops. I think the focus on the concerns about people being able to save for retirement help bolster our message about there should be more of this right that's what members of Congress have told us that's why. Aska first started working with a bipartisan group from the tax writing committees on legislation to encourage more esops. Because at the beginning they would tell us well you don't need to just come tell us these are working really well please don't hurt us like why don't we have more.

[33:16] And so we've been working proactively on legislation that will encourage more employee ownership it's primarily through a 10 the 1042 tax incentive for S corporation owners to sell to an ESOP just having legislation that says there should be more allows members of Congress to sign their name on to that and that both helps us play defense when things could come up with big tax years like next year um and also try to to try to get something proactively done or at least educate more members of Congress about what else can we do. To expand the number of esops and then and the number of workers that have access to saving for retirement through you know stock in their employer.

[33:58] Oh I I think that there's a lot of success typically in putting together 2 of the comments that that you made and the Congress the Congress people understanding the impact and how well things are running and then your comment on Regulators where they said we thought only bad ones existed right so Regulators are probably only see the bad ones until they see a good 1 Congress. Only see what's put in front of them because they're so busy on so many other priorities um for. Employee ownership is 1 of many priorities for individual many many I mean we coach our lobby day participants when you're going in to meet with a member of Congress or staff imagine you are 1 of probably 12 meetings they're having that day that means 60 in a week then they go back home and have more meetings so how do we stand out and it's back to that positive messaging that's how we stand out we have to make ourselves look big our message looks big, positive it's encouraging and we need more of this.

[34:59] Absolutely so you mentioned as we know that the administration is changing in in January and 1 of the things that span. Um uh pretty prevalent in recent news is is is some of the the cabinet appointees and then new roles like. Uh the department of government efficiency. Uh and 1 of the things that I found fascinating and interacting with you and your team over the last couple of years and learning more about the behind the scenes and what happens in Washington.

[35:29] Is is related to how laws are written and how tax legislation is scored. Um have the JCT does that and how that's been kind of an uphill battle because of how that scoring has not necessarily favored uh the the ESOP components um but I found it fascinating that the the terminology of expenditures just meant not taking more in more tax revenueum. And if you could talk a little bit about and speculate uh within a reason uh the uh the new Department of government efficiency and how they're looking at actual expenditures we've had basically Decades of deficit spending in Washington. Um and how that that whole mix uh might impact positively or negatively you have.

[36:21] Yeah I think we could spend an hour talking about joint tax and Doge um and all of those aspects I think what's interesting is that new government group or Elon musk's project I think is primarily looking at spending and they're going to have wipe the uphill battle given that Congress controls the purse strings.

[36:42] And there's very little discretionary spending if we're talking about the spending side right most of our spending is on entitlements it's on Social Security Medicare Medicaid and then there's the Department of Defense which you know Republicans in particular are loved to cut defense spending so I think especially as Washington insiders we will just be watching very curiously to see what comes up on the spending side and how much push back they get, um from Congress but over on the revenue side and the tax side you had referenced that 2025 is going to be a huge year some people are calling it tax mageddon tax apocalypse it's it's all of those things um it's the Super Bowl of tax for those of us who are in the tax policy world that we haven't had a big Bill since 2017 um and something that's of most interest and where esops have to be vigilant is when you're looking at what we call pay Force or offsetsandsometimes Congress decides to offset tax cuts by tax increases somewhere else because they do not want to be adding to the federal debt overall deficit which is growing and in trillions of dollars at this point so.

[38:03] Kind of depends who's in charge and kind of what the current climate is of should we pay for tax cuts you will find some leaders of. The tax writing committees on the Republican side saying that tax cuts benefit the economy and because of this economic boost we don't need to pay for them like there's no reason to pay for them or if we just extend the expiring Provisions from 2017 you know that's kind of baked into the Baseline I think there's some games they can play and not necessarily pay for everything but on the other hand you have policy makers who say. The deficit is really important that is going to be is a drag on our economy we need to pay for tax cuts and that means if we are going to lower individual tax rates or we're going to lower the corporate tax rate or we're going to expand the child tax credit or expand the low-income housing tax credit there needs to be an offset where we are increasing taxes somewhere else. And that is where asaps need to be vigilant because we do have a very unique structure as a pass through owned by a retirement plan and so therefore taxes are deferred until the employee owner retires and pays individual tax rates there.

[39:23] Butt joint tax which is kind of the behind the scenes not elected officials they are employees of the Congress they're made up of economists and attorneys. They're the ones who go in the secret little room and you know move the levers on everything maybe like The Wizard of Oz right going back to Wicked. And out pops a score this is how much it would cost if we scaled back the S corporation esap benefit this is how much revenue we would raise if we did not extend the top 2 tax brackets. You know billions of dollars and they can play with that Revenue so they have a tremendous amount of power. And it is eskas primary job to ensure that the current sea tax treatment is not scaled back. In any way and used as an offset.

[40:16] And so we have to be vigilant about that because that's that's really that's how it works is that if policy makers are looking for dollars there's a you referred to tax expenditures every year the Joint Committee contact station comes out with a tax expenditures list and that includes everything that defers revenue or cost the federal government Revenue so any sort of your mortgage interest deduction charitable tax deductions things like that they have a score, and if you were to get rid of them that is how much revenue you would raise. So we have to be very very mindful of offsets paid for us and how they will be used in the 2025 tax bill.

[40:56] And your your efforts in your advocacy for that because that's all the things that we've talked about so far today right and how you interact with your with our Regulators with the Congress people with the Committees in particular and making sure that everyone is aware uh really the the down ranging Act of anything that they will do that would disrupt the the escort Visa. Right communicating why this structure exists the benefits of it the data. Again and just make sure making sure there is the support among the key policy makers to maintain it and protect it that it should never be used as an offset.

[41:38] Like a well um thank you again for for doing that so the rest of us still have to it's what we're built for that's right.

[41:48] Uh in in that vein if members of the audience want to make a difference for for Esko for their local communities uh when when they become an ask a member uh to talk a little bit about um what that what that looks like for them how you interact with your members uh of esap companies uh and then some of the ways that you can help connect them again more more closely with with the their districts right so for your listeners that are not familiar with Esa please check us out at www.esa.org an active Coalition Association of private employee-owned companies, and we would welcome getting to know you and hope you will reach out so we really again our primary aim is advocacy there are other great groups in the ESOP space that provide a lot of Education that are the right place to go for your for your employee ownership committee within your company to talk about communicating the ESOP within your company our number 1 aim is advocacy so we are a. Focused organization and the political space. Um if you were to join Esa then you would have access to the content that we push out on a regular basis with um you know policy and politics, things that an seap company leaders should be aware of and we have 2 major conferences a year the first is our kickoff event in February which is which is our Leadership Summit.

[43:17] Being held in Fort Lauderdale. It's a great event we really hope that if that were your first es event it's a great opportunity to interact with about 200 of who will become your closest friends, in the ESOP Community it's the top ESOP companies in the top um advisors in the area that that that was my first ESOP and first Esa event when I came into the community so I 100% agree with what I was assessing. And and you you will get a lot of politics at that event um considering that it is a again the start of a new Congress it's our kickoff event of the year we will have lots to share about what we expect from this new Congress from the new white house we'll have political speakers we usually get 3 to 4 members of Congress who attend and speak and meet with our attendees and then we also have technical breakout sessions led by our advisors and we will have a great dinner speaker soon to be soon to be announced but it's really being part of the community I think the networking aspect for leaders of SC.

[44:21] Of seep companies is second to none I mean you're with a peer group there of leaders that may not be in your industry but are having similar ESOP challenges or have answers to your facing whether it's with respect to mergers and Acquisitions or repurchase obligations it's a great opportunity just to build that Network. And I think you'll also find that business relationships just for your company can be formed there like it's a I think it's incredible the stories I've heard of like oh I met this person from this company and now we're doing business together because they're A supplier for us or we can interact in in a way outside of what brought us together with esca.

[45:01] So there's that opportunity and then we do Regional conferences um around the country primarily Chicago and Los Angelesum we'll be there in 2025 and then some smaller membership events just. Everywhere that we can be when it's a chance to engage with our member companies and prospective members.

[45:21] Very good well know any any final thoughts for our audience on escort B cells sure I think just the final thoughts going into the new year with all of the changes in Washington DC is our community has a lot to be proud of what we've accomplished so far and while it has been a very turbulent year politically a lot of people a lot of change in the air. Were built to withstand that because of who our employee and companies are what our bipartisan messaging is um so this is really an opportunity for us and we will continue to embrace this opportunity with the help of our members and new members joining us to grow our community and to continue to spread the word and see the number of employee owned companies grow. Throughout America as we continue just to spread this positive bipartisan message about employee owners saving for retirement through the American dream at work.

[46:21] Very good well thank you know Ultra spending time with me with our our listeners today, and for our audience and everyone listening thank you for joining us I hope that. Uh you're able to see another facet of the ESOP community and how everyone works together and the important work that the eska does in advocating for the reason that that you're probably listening to this podcastso I encourage you to to check them out and to reach out to Noel on the team manesa if you're interested in learning more uh but again thank you for joining us on this step of your journey to an ESOP and thanks Jason.