Sponsors (30)
Introduced September 11, 2025 by Rashida Tlaib · Last progress September 11, 2025
The bill increases pay transparency and creates incentives for large firms to narrow CEO-to-worker pay gaps (while raising revenue), but imposes compliance costs and risks that firms may pass costs to consumers or cut investment and employment, with unequal treatment for smaller firms under the $100M threshold.
Workers and investors: Large private companies (≥$100M in average receipts) must report CEO-to-median-worker pay ratios, increasing corporate pay transparency for employees, investors, and the public.
Employees at large firms: Firms that keep CEO-to-median-worker pay ratios at or below 50:1 avoid penalties, creating a direct incentive for more equitable pay practices among big companies.
Taxpayers/public budgets: Penalties on firms with high pay ratios generate additional federal revenue that could fund public services or reduce deficits.
Consumers and workers: Targeted corporations may pass higher tax/penalty costs to consumers through higher prices or to workers through reduced compensation or layoffs, and may cut investment or hiring, harming middle-class families and jobseekers.
Small businesses and owners: The exemption for companies under $100M creates uneven treatment that may incentivize corporate restructuring or growth avoidance to stay below the threshold.
Large private companies (and indirectly small firms that deal with them): New reporting and compliance obligations raise administrative costs and regulatory burden for affected firms.
Based on analysis of 2 sections of legislative text.
Adds a penalty to the corporate tax rate for firms whose CEO-to-median-worker pay ratio exceeds 50:1, using a five-year averaged pay ratio and applying to firms with ≥ $100M average receipts.
Increases the corporate income tax rate for corporations whose CEO-to-median-worker pay ratio exceeds 50:1 by adding a percentage-point penalty to the base corporate rate. The pay ratio is calculated using a five-year annualized average of compensation under the SEC pay-ratio rules (with two adjustments) and applies only to corporations with average gross receipts of at least $100 million over the prior three years. The new rule takes effect for taxable years beginning after December 31, 2025, and directs the Treasury to issue anti-avoidance regulations, including rules to prevent firms from manipulating workforce composition to evade the penalty.