Sponsors (3)
Introduced August 22, 2025 by Mark James Desaulnier · Last progress August 22, 2025
The bill uses tax and procurement incentives plus mandatory pay-data reporting to push firms toward narrower CEO-to-worker pay gaps and greater transparency, at the cost of added compliance burdens, potential increases in tax liabilities for high-ratio firms, and risks of offshoring or gaming that could reduce U.S. jobs or competition.
Publicly traded companies will have to report CEO and median worker pay data to the IRS, giving investors, employees, and taxpayers clearer information about corporate pay practices.
Companies with lower CEO-to-worker pay ratios can receive tax advantages and procurement preferences, creating a financial incentive for large firms to narrow pay gaps and potentially improve wages or benefits for rank-and-file employees.
Federal contracting policies that favor firms with smaller executive-to-worker pay differentials can push contractors to adopt fairer pay practices and align procurement with corporate responsibility goals.
Companies with high CEO-to-worker pay ratios will face higher effective tax rates, which could lead to higher consumer prices, reduced investment, or lower returns for shareholders.
Firms may respond by shifting hiring offshore or reclassifying employees as contractors to avoid raising the U.S. median compensation denominator, potentially reducing U.S. employment.
New reporting and compliance requirements for pay data and procurement-based rules will increase administrative costs and burdens for affected corporations and government contractors.
Based on analysis of 3 sections of legislative text.
Links top corporate tax rates to a company's CEO-to-median-worker pay ratio and gives federal procurement preference to bidders with ratios under 50:1.
Creates a new corporate tax adjustment that raises the top corporate income tax rate for publicly traded companies with high CEO-to-median-worker pay ratios, and requires those companies to file compensation reports with the IRS. It also directs federal agencies to give an evaluation preference in procurement to bidders whose prior-year compensation ratio is below 50-to-1, using the same ratio definition tied to the tax rule.