Sponsors (3)
The bill uses tax and procurement incentives plus reporting requirements to pressure firms toward narrower CEO-to-worker pay gaps and to protect U.S. jobs, but it creates compliance costs, risks of firms gaming or offshoring to avoid penalties, and potential economic side effects like higher prices or reduced investment.
Publicly traded firms that keep CEOs' pay closer to median worker pay will face lower effective top corporate tax rates and receive procurement advantages, creating a strong incentive for more equitable pay practices and expanding business for lower-pay-gap firms.
Taxpayers and the public will gain greater transparency because publicly traded companies must report CEO-to-median-worker pay ratios and workforce composition to the Treasury.
U.S. full-time employees and middle-class families may see stronger job retention or hiring because the bill applies special rules when U.S. FTEs fall and contracted/foreign FTEs rise, which encourages maintaining or growing domestic payrolls.
Consumers, shareholders, and employees at high pay-ratio firms may face higher prices, reduced investment or dividends, or job cuts because those companies will pay higher taxes tied to pay ratios; behavioral responses could also make federal revenue less predictable.
Firms may respond by reclassifying workers, increasing contractor use, offshoring jobs, or altering reporting/financial structures to meet pay-ratio metrics, which can weaken worker protections and shift employment away from U.S. workers.
Public companies and federal agencies will face increased compliance, reporting, and procurement-verification burdens, raising administrative costs for firms and slowing government procurement processes.
Based on analysis of 3 sections of legislative text.
Adjusts corporate tax rates for publicly traded firms based on their CEO-to-median-employee pay ratio and gives federal contracting preference to firms with ratios under 50:1.
Introduced August 22, 2025 by Mark James Desaulnier · Last progress August 22, 2025
Adjusts corporate income tax rates for publicly traded companies using a company-specific "compensation ratio" that compares CEO (or highest-paid officer) pay to the median U.S. employee pay, and requires Treasury reporting and regulations to implement the calculation. For federal procurement, gives a bidding preference to contractors whose prior-year compensation ratio is below 50-to-1, using the same ratio definition. The measure defines how compensation and the ratio are calculated (including full-time equivalents, contracted and foreign employees, and controlled-group aggregation), requires taxpayers to furnish reports to the Treasury Secretary, and takes effect for taxable years beginning after enactment; the procurement preference applies to contracts after enactment using the prior calendar year ratio.