Overriding the veto of Governor Jay Nixon, the Missouri General Assembly passed the Stock Ownership Deduction Act (HB 2030), which allows a company to defer up to 50 percent of the taxes gained from the sale of stock to an employee stock ownership plan, provided that the company is at least 30% employee-owned. Support for the bill often cited the success of the Kansas City engineering and architecture firm, Burns & McDonnell, which has thrived for 30 years as an employee-owned company.
Governor Nixon vetoed the bill in June after it was first passed by the legislature, arguing that it would cost the state $10 million in tax revenue without creating any new jobs. Supporters of the bill countered that employee ownership is a great mechanism for retaining jobs, and that the bill would help expand employee ownership throughout the state. Burns & McDonnell became an employee-owned company in 1985 when the company’s then-owner, Armco, considered selling it to a foreign corporation. Since then, the company has grown from 600 employees to 5100 and has increased revenue from $41 million to $2.5 billion.
The Employee-owned S Corporations of America (ESCA) actively supports efforts to expand and protect employee-owned S corporations around the country. In Missouri, they note that the state has 31,000 business owners over the age of 55 who may soon be looking to sell their businesses as they prepare to retire. The new legislation is an opportunity to ensure that many of those companies remain rooted in the local economies of the state for many years into the future.