In all the urgency of the pandemic and the economy’s re-opening, it is easy to ignore what other policies are going into place. But the fact is that much else is happening.  As part of those non-pandemic measures, this White House seems determined to broaden corporate ownership throughout the middle class.

A first sign of this effort appeared as early as 2018, when hidden in that year’s defense appropriation was legislation to facilitate employee stock ownership plans (ESOPs). More recently, White House spokespeople have outlined coming efforts to expand tax-advantaged investment plans beyond already existing IRA and (401)k arrangements to allow people to save more for retirement with similar tax advantages but also to save for medical and educational expenses. Both the 2018 legislation and these recent proposals would encourage saving and investment as well as give the average American a chance for greater wealth accumulation and a more significant stake in the nation’s private corporations and the economic system.

The 2018 action developed from a curious alliance. It began with a bill sponsored by Representative Nydia M. Velazquez (D-NY), The Main Street Employee Ownership Act. It streamlined the means for companies to use ESOPs to buy stock for their employees. It also authorized the Small Business Administration to lend funds to companies for this purpose. Under these arrangements companies borrow to buy their own stock in the open market and distribute it to their employees at no cost. Income from the investments accumulates tax free and provides funds for the sponsoring company to retire the debt. The plans bind management to repurchase the stock at fair market value from employees when they retire or leave for another job. Democratic Senator Kirsten Gellibrand of New York managed to tack this legislation onto the defense appropriation legislation that President Donald Trump quickly signed into law. Though Trump did not mention this item at the time, the White House was well aware of it and approved, despite the fact that Democrats and especially Gellibrand, a vocal Trump critic, advanced it.

Though far from widespread yet, there is every reason to expect such ESOP plans to expand. Even though unemployment rates have risen asa result of the anti-virus quarantines and lockdowns, firms remain eager to secure valued employees, and ESOP arrangements are a relatively costless way to offer benefits and gain loyalty. Employees gain with a new, tax-advantaged way to built wealth and secure the voting rights of any other stockholder. According to recent calculations by the Labor Department, the average ESOP participant has a stake of $119,691 – not a small figure for the average working man or woman. What is still more appealing is that the ESOPs, because they require no initial investment by participants, are available to even lowest paid employees who typically have little or no surplus funds.

The more recent White House effort has a different nature from the ESOP legislation. Both Vice President Mike Pence and Larry Kudlow, director of the president’s National Economic Council, have outlined plans to allow Americans earning less than $200,000 a year to invest up to $10,000 a year in special accounts for retirement as well as health and educational costs. These accounts, which would stand apart from existing retirement arrangements, would enjoy the same tax advantages as IRAs and 401(k)s: The funds flowing into them would reduce the participants taxable income, while dividends, interest, and appreciation would accrue tax free. Income taxes would be due only when participants withdraw the funds, but they would be free of capital gains taxes.

Read the rest of Milton Ezrati‘s article here at Forbes