Sponsors (3)
Adjusts publicly traded corporations' federal tax rate based on a CEO‑to‑median‑worker pay ratio and gives federal contracting preference to firms with a ratio under 50:1.
The bill trades a policy of steering federal dollars and tax incentives toward firms with narrower CEO-to-worker pay gaps—aiming to promote pay equity and domestic jobs—against higher compliance and verification costs, risks of corporate gaming or offshoring, and potential impacts on investment, competition, and contract prices.
Publicly traded corporations with lower CEO-to-median-worker pay will face a lower effective top corporate tax rate, creating a financial incentive for firms to narrow pay gaps (affects corporate pay decisions and investors).
Federal procurement will preferentially reward contractors with pay ratios below 50-to-1, directing government business toward lower-pay-gap firms and potentially improving retention and productivity for agencies and taxpayers.
The bill requires reporting of executive-to-median-worker pay ratios to Treasury, increasing public and governmental transparency about executive compensation and workforce composition.
Publicly traded companies with high CEO-to-median-worker pay ratios will face higher corporate tax bills, which can reduce investment and dividends or be passed to consumers through higher prices.
Calculating pay ratios, applying FTE rules, and aggregating across controlled groups will raise compliance and reporting costs for companies and increase tax-preparation expenses.
Firms may respond by reclassifying workers (using contractors), offshoring jobs, or changing hours to manipulate compensation ratios, weakening worker protections and shifting jobs abroad.
Based on analysis of 3 sections of legislative text.
Official title: To amend the Internal Revenue Code of 1986 to adjust the rate of income tax of a publicly traded corporation based on the ratio of compensation of the corporations highest paid employee to the median compensation of all the corporations employees, and for other purposes.
Introduced August 22, 2025 by Mark James Desaulnier · Last progress August 22, 2025
Imposes a company-specific adjustment to the corporate income tax rate for publicly traded corporations based on a CEO‑to‑median‑worker pay “compensation ratio,” and requires federal contracting officers to prefer bidders whose prior‑year compensation ratio is under 50‑to‑1. It defines how to measure compensation and the ratio, requires reporting to the Treasury, authorizes regulations, and applies the tax change to taxable years beginning after enactment while tying the procurement preference to the prior calendar year’s ratio.