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Creates a new corporate tax adjustment that raises the top corporate income tax rate for publicly traded companies whose CEO (or highest-paid employee) earns many times more than their median U.S. worker, using a company-specific “compensation ratio.” It also directs federal agencies to favor bidders for federal contracts whose compensation ratio in the prior year is below 50-to-1. The measure defines how the ratio is calculated (using SEC pay disclosures for the CEO/highest-paid employee and wage data for U.S. employees), requires reporting to the Treasury, allows Treasury to issue regulations, and applies the tax change to taxable years beginning after enactment; the procurement preference uses the prior calendar year’s ratio when evaluating bids.
The bill leverages taxes and federal procurement to push public companies toward narrower CEO-to-worker pay gaps and greater transparency, but does so at the risk of higher corporate tax burdens, increased compliance costs, potential price or investment impacts, and incentives that could encourage offshoring or worker reclassification.
Publicly traded companies face higher taxes and weaker federal-contract competitiveness if they have high CEO-to-median-worker pay ratios, creating strong incentives to lower executive pay or raise worker pay.
The tax and procurement incentives encourage firms to retain or increase U.S. middle-worker employment and wages to reduce measured pay ratios.
Requires corporations to report compensation data to the Treasury, improving transparency about pay practices of publicly traded companies.
Many publicly traded firms will face higher tax liabilities, which could be passed to consumers through higher prices, slow hiring, or reduced business investment.
Companies may respond by reclassifying employees as contractors or relocating jobs abroad to lower measured U.S. median pay, harming U.S. workers.
Creates new administrative and reporting burdens for companies and for federal agencies/contractors required to calculate and verify compensation ratios, raising compliance costs.
Introduced August 22, 2025 by Mark James Desaulnier · Last progress August 22, 2025