The Tax Excessive CEO Pay Act would impose a corporate tax penalty on large companies with extreme pay gaps between their top executives and median workers. Companies with a CEO-to-median-worker pay ratio exceeding 50-to-1 would face an increase to their federal corporate tax rate, with the penalty rising incrementally based on how extreme the gap is—ranging from 0.5 percentage points for ratios between 50-to-1 and 100-to-1, up to 5 percentage points for ratios exceeding 500-to-1. The law would apply only to publicly traded companies and private corporations with average annual revenues of at least $100 million, leaving smaller private businesses exempt. The Treasury Department would be required to issue regulations to prevent companies from gaming the system through workforce changes like increased contractor use. The provision would take effect for tax years beginning after December 31, 2025.
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