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23 W. St. U. L. Rev. 53 (1995-1996)
ESOPs: Corporate Advantages Put Taxpayers at a Disadvantage

handle is hein.journals/wsulr23 and id is 59 raw text is: ESOPs: Corporate Advantages Put Taxpayers at a Disadvantage By Stanley R. Pietruska III* INTRODUCTION For over twenty years, the Employee Retirement Income Security Act (hereinafter ERISA)' has been the most important part of employee benefit law. In 1974, Congress felt a need to help employers shape the retirement future for workers. To meet this need, it created ERISA to give employers some clear direction as to where they should begin. Employees were not the only group to be helped out; employers were also to receive their fair share of benefits. Huge tax advantages were to be Congress' incentive for the employers. It is how these tax advantages are implemented to the detriment of society that we are concerned with today. The rosy picture painted by proponents of retirement plans, such as the Employee Stock Ownership Plan (hereinafter ESOP),2 is often illusory as to the true benefit to society and workers. This article will attempt to show the actual effect these plans have on employers and employees. It will also flesh out the effect on the American taxpayers who, in essence, finance ESOPs. Tax dollars spent on ESOPs could be redirected to other programs and lessen the tax burden. After reading this article, it will be clear that ESOPs' tax benefits are both unnecessary for their promotion and are an economic boon to those companies who have implemented them. The end result is a waste of taxpayer dollars, which hurts us all. * J.D., Oklahoma City University, Dec. 1993; admitted to New Jersey Bar, June 1994; member, American Bar Association, since 1990; member, American Trial Lawyers Association, since 1991; currently a sole practitioner in Jersey City, New Jersey. 1. Employee Retirement Income Security Act of 1974, Pub. L. No. 93-406, 88 Stat. 829 (1974) (codified at 29 U.S.C. § 1001 (1974) (hereinafter ERISA)). (Hereinafter, all citations to ERISA and a section number refer to the code section as found in Pub L. No. 93- 406.). 2. See Employee Stock Ownership Plan described in detail infra in Section IB.

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