Tax Excessive CEO Pay Act of 2024
This bill increases the corporate income tax rate based on the ratio of compensation of principal executive
Specifically, the bill increases the corporate income tax rate by 0.5 percentage points for a corporation with a pay ratio disparity that is more than 50 to 1. The tax rate increases by 1 percentage point for a pay ratio disparity that is more than 100 to 1, but not greater than 200 to 1. The pay ratio disparity extends to 500 to 1, in which case the increase is 5 percentage points. The bill exempts from such an increase certain corporations based upon their average annual gross receipts.
[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7041 Introduced in House (IH)]
<DOC>
118th CONGRESS
2d Session
H. R. 7041
To amend the Internal Revenue Code of 1986 to impose a corporate tax
rate increase on companies whose ratio of compensation of the CEO or
other highest paid employee to median worker compensation is more than
50 to 1, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
January 18, 2024
Ms. Lee of California (for herself, Ms. Tlaib, Ms. Norton, Mrs. Watson
Coleman, Mr. Khanna, Mr. Garcia of Illinois, Mr. McGovern, Ms. Omar,
Ms. Jayapal, Ms. Bush, Mr. Huffman, Mr. Grijalva, and Mr. Bowman)
introduced the following bill; which was referred to the Committee on
Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to impose a corporate tax
rate increase on companies whose ratio of compensation of the CEO or
other highest paid employee to median worker compensation is more than
50 to 1, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Tax Excessive CEO Pay Act of 2024''.
SEC. 2. CORPORATE TAX INCREASE BASED ON COMPENSATION RATIO.
(a) In General.--Section 11 of the Internal Revenue Code of 1986 is
amended by adding at the end the following new subsection:
``(e) Tax Increase Based on Pay Ratio.--
``(1) In general.--
``(A) Increase imposed.--In the case of any
corporation (except as provided in subparagraph
(B)(ii)(II)) the pay ratio of which is greater than 50
to 1 for a taxable year, the 21 percent rate under
subsection (b) for such taxable year shall be increased
by the penalty determined under paragraph (2).
``(B) Pay ratio.--For purposes of this subsection--
``(i) In general.--The term `pay ratio'
means the ratio described in section
229.402(u)(1)(iii) of title 17, Code of Federal
Regulations (or any successor thereto), except
that if the highest compensated employee of the
corporation is not the principal executive
officer, the ratio shall be determined based on
the compensation of such highest compensated
employee.
``(ii) Corporations not subject to sec
filing.--In the case of a corporation which
(without regard to this clause) is not subject
to the authorities described in section
229.10(a) of title 17, Code of Federal
Regulations (or any successor thereto)--
``(I) Large corporations.--If the
average annual gross receipts of such
corporation for the 3-taxable-year
period ending with the taxable year
which precedes such taxable year are at
least $100,000,000, such corporation
shall calculate and report its pay
ratio according to the method which the
Secretary shall prescribe by
regulations consistent with the
regulation described in clause (i).
``(II) Other private corporations
exempt.--Subparagraph (A) shall not
apply to any such corporation if the
average annual gross receipts of such
corporation for the 3-taxable-year
period ending with the taxable year
which precedes such taxable year are
less than $100,000,000.
``(2) Amount of penalty.--The penalty determined under this
paragraph is an increase, expressed in percentage points,
determined in accordance with the following table:
``If the pay ratio is: The increase is:
Greater than 50 to 1, but not greater than 100 to 1 0.5
Greater than 100 to 1, but not greater than 200 to 1
1.
Greater than 200 to 1, but not greater than 300 to 2
1.
Greater than 300 to 1, but not greater than 400 to 3
1.
Greater than 400 to 1, but not greater than 500 to 4
1.
Greater than 500 to 1.............................. 5.''.
(b) Conforming Amendments.--
(1) The following sections of the Internal Revenue Code of
1986 are each amended by inserting ``applicable to the
corporation (after the application of section 11(e))'' after
``section 11(b)'':
(A) Section 280C(c)(2)(B)(ii)(II).
(B) Paragraphs (2)(B) and (6)(A)(ii) of section
860E(e).
(C) Section 7874(e)(1)(B).
(2) Section 852(b)(3)(A) of such Code is amended by
inserting ``(after the application of section 11(e))'' after
``section 11(b)''.
(3) Paragraphs (1) and (2) of section 1445(e) of such Code
are each amended by striking ``in effect for the taxable year
under section 11(b)'' and inserting ``applicable to such
corporation under section 11 for the taxable year''.
(4) Section 1446(b)(2)(B) of such Code is amended by
striking ``specified in section 11(b)'' and inserting
``applicable to such corporation under section 11 for the
taxable year''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2024.
(d) Regulations.--The Secretary of the Treasury (or the Secretary's
delegate) shall issue regulations as necessary to prevent avoidance of
the purposes of the amendments made by subsection (a), including
regulations to prevent the manipulation of the compensation ratio under
section 11(e) of the Internal Revenue Code of 1986 by changes to the
composition of the workforce (including by using the services of
contractors rather than employees).
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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