Colorado Expands

The Governor of Colorado signed a bill to expand the state's employee ownership tax credit

In Brief: Colorado Governor Jared Polis signed a bill this week to expand employee ownership tax credits. The Bill was introduced by Colorado Representatives Rick Taggart and William Lindstedt and State Senator Nick Hinrichsen.

The Details: Under current regulations, businesses are given a 50% credit for the costs of converting to a form of employee ownership. However, there is a cap of $25,000 in credit for converting to an employee ownership trust or worker cooperative, and $100,000 for converting to an employee stock ownership plan. The new bill increases the cap to $40,000 for converting to an employee owned trust and $150,000 for an employee stock ownership plan, and extends a 50% credit capped at $25,000 to firms increasing their employee ownership by 20%. The expansion also includes firms converting to or expanding an alternate equity structure - which can include profit sharing, stock options, LLC membership and more.

Why It Matters: As states expand their tax credits and work to encourage moves to employee ownership, state and federal politicians as well as shared ownership advocates will be watching closely to determine their effects and effectiveness. Effective legislation could serve as a blueprint for the future. However, if the tax expansion doesn’t result in increased transitions to employee ownership, policymakers will know to pursue other options. 

Go Deeper: A summary of the bill can be found here.

Image Credit: Photo by Clay Banks on Unsplash