Iowa

An ESOP is a type of tax-qualified retirement plan, one that states such as Iowa have identified as a tool for helping retain businesses when owners decide to sell some or all of their interests in a company.

Here is how an ESOP generally works: A privately held company contributes its stock, or money to buy its stock, to a retirement plan for employees. Each worker participating in the plan has his or her own account, and an ESOP trust is created to hold these shares of company stock. ESOPs can be a mechanism for allowing partial or full ownership of a privately held company to be transferred to employees (when the owner retires, for example). In contrast, the sale of a business to an outside entity increases the risk of lost jobs.

According to the National Center for Employee Ownership, other potential benefits of ESOPs include improving retirement security, reducing a company’s tax burden, bolstering worker morale, and giving employees a voice in management. Since the passage of legislation in 2012 (HF 2465), Iowa has provided a tax incentive to encourage the sale of in-state businesses to employees: Owners get a 50 percent deduction from income taxes on any net gains from the sale; the transaction must result in the employees (via the ESOP) owning at least 30 percent of the company. Iowa also reimburses 50 percent of the costs for businesses that conduct studies on the feasibility of setting up an ESOP.

Amid widespread protests and calls for change in response to the May 25 killing of George Floyd by police in Minneapolis, the push for state-level legislative reforms has intensified. Here is a look at some of the bills and policy proposals in three Midwestern states: Minnesota, Michigan and Iowa.

Starting in 2025, all egg-laying hens in Michigan will be cage-free, the result of legislation signed into law late last year after negotiations among lawmakers, industry leaders and animal-rights groups. “[It] synchronizes Michigan’s hen-housing law with state and national retail and restaurant commitments of only buying eggs from 100 percent cage-free farms by 2025,” says Sen. Kevin Daley, the sponsor of SB 174.

Under the law, retailers can only sell eggs from hens in a “cage-free housing system”; to qualify as cage-free, the housing must “provide enrichments that allow the hens to exhibit natural behaviors” — for example, scratch areas, perches, nest boxes and dust bathing areas.

Michigan is the first Midwestern state with a cage-free law, and now the largest egg-producing state that dictates hen housing. Outside the region, California, Massachusetts, Washington, Oregon and Rhode Island already have such laws. In October 2019, the North American Meat Institute filed a lawsuit challenging the constitutionality of California’s voter-approved animal-confinement rules.

In Iowa, Gov. Kim Reynolds has made improving economic opportunities to all areas of the state a top priority. To do this, she has placed a particular focus on rural Iowa and the challenges faced by those communities.

Since 2018, state and community leaders have taken part in the governor’s Empower Rural Iowa Initiative in order to address the challenges facing the state’s rural communities. The initiative’s work resulted in legislation and a set of recommendations for continued action.

Sixty percent of Iowans live in counties with populations less than 100,000 and 30 percent live in counties with less than 25,000, making rural Iowa critical to the entire state, says Iowa Sen. Mark Lofgren.