Third, a policy aimed at facilitating employee ownership: S corporation employee stock ownership plans (S ESOPs) are also a deviation from a pure income tax system, but the benefits of promoting employee ownership are broad based and well established.

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The plans are voluntary and differ from restricted stock, stock options and so-called employee stock-ownership plans, all of which allow companies to grant stock to employees or managers that can't be cashed in until a later date.

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Known as employee stock-ownership plans, or ESOPs, the move is being embraced by smaller firms, especially those struggling to find buyers during the weak economy.

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In the decade since lawmakers first allowed so-called pass-through entities, known as S corporations, to offer employee stock-ownership plans, the number of these firms offering ESOPs has more than doubled, according to Matrix Global Advisors, a consulting firm.

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