Fifty Years of Utopia: A Half-Century after Louis Kelso’s The Capitalist Manifesto, a Look Back at the Weird History of the ESOP
Andrew Stumpff Morrison
University of Michigan Law School; University of Alabama Law School
June 1, 2008
Tax Lawyer, Vol. 62, No. 2, p. 419, 2009
U of Michigan Public Law Working Paper No. 204
This article summarizes the bizarre historical background of the employee stock ownership plan, or "ESOP." This specialized type of retirement plan, in which participants' retirement savings are invested in the stock of their employer, is the product of the economic theorizing and vigorous lobbying of a single eccentric individual, Louis Kelso. During the 1970s Kelso personally persuaded a powerful U.S. Senator, Russell Long of Louisiana, that employee ownership was a good idea and should be promoted through the use of the retirement system. Despite the fact that ESOPs rely for their justification on economic arguments rejected by mainstream economists, the tax subsidies promoted by Kelso and Long have left ESOPs a prominent feature, to this day, of the American retirement and tax system.
Number of Pages in PDF File: 14
Keywords: ESOP, employee stock ownership plan, Louis Kelso, Russell Long
JEL Classification: J26, K34Accepted Paper Series
Date posted: June 13, 2010 ; Last revised: July 1, 2010
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