H.R. 5719: Empowering Employees Through Stock Ownership Act

By at 19 September, 2016, 12:30 pm

UPDATE:  On September 22, 2016 the U.S. House passed H.R. 5719 by a vote of 287-124.


The Honorable Erik Paulsen

United States House of Representatives

Washington, DC 20515


The Honorable Joe Crowley

United States House of Representatives

Washington, DC 20515


Dear Representatives Paulsen and Crowley:

The Small Business & Entrepreneurship Council (SBE Council) and its 100,000 members nationwide strongly support H.R. 5719, the Empowering Employees Through Stock Ownership Act.

Startup companies face many obstacles, including the recruitment and retention of skilled employees. Employees at startup companies often do not enjoy the higher salaries offered at established companies, but are drawn to the idea of helping to build an enterprise that is at the forefront of the next innovation. At many startup companies, employees are offered stock options or equity ownership to compensate for lower compensation and to share ownership in the company. Currently, if employees exercise these options, they are required to pay taxes immediately but sometimes lack the resources to do so. That means they may miss out on a potential financial opportunity. This is a barrier for some individuals to join a start-up, which means both the company and individual lose, and so does our economy.

H.R. 5719 resolves this barrier by allowing employees seven years or before the stock becomes tradeable on an established market to pay the taxes when they exercise options. H.R. 5719 will help startup companies attract and keep talented employees, and provide skilled individuals another key incentive to join these promising businesses.

Thank you for your leadership on this important issue. SBE Council looks forward to working with you to advance H.R. 5719 into law.


Karen Kerrigan, President & CEO

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