Sponsors (29)
The bill seeks to discourage extreme CEO-to-worker pay disparities and raise revenue by taxing large firms with high pay ratios and requiring broader pay-ratio reporting, but it risks higher consumer prices, reduced investment and returns, increased compliance costs, and employer workarounds that could harm employees.
Workers and taxpayers: imposing a higher tax on corporations with very high CEO-to-worker pay ratios creates a financial incentive to curb extreme executive compensation.
Taxpayers and the general public: the tax raises additional federal revenue from large corporations with high pay disparities, which could fund public services or reduce the deficit.
Taxpayers, workers, and regulators: large private firms (≥$100M receipts) will be required to report pay-ratio information similar to SEC filers, improving transparency about pay inequality.
Consumers and workers: affected corporations may pass higher tax costs to customers through price increases or reduce hiring/wages, hurting middle‑class families, small-business owners, and workers.
Workers: firms may restructure labor arrangements (e.g., shift employees to contractors) to avoid the tax, which can reduce benefits and legal protections and undermine expected revenue.
Investors and savers: higher taxes on some corporations could reduce corporate investment and shareholder returns, negatively affecting investors and retirement accounts that hold corporate stock.
Based on analysis of 2 sections of legislative text.
Raises corporate tax above 21% for corporations with a CEO-to-worker pay ratio over 50:1, scaling the increase by how large the ratio is; exempts private firms under $100M receipts.
Introduced September 11, 2025 by Rashida Tlaib · Last progress September 11, 2025
Imposes an extra corporate income tax on companies whose CEO-to-worker pay ratio exceeds 50:1, with the added tax amount increasing on a sliding scale tied to how large the ratio is. Requires covered corporations to calculate and report a pay ratio (using a modified SEC-style method and a five-year average), exempts smaller private firms under a $100 million average gross receipts threshold, and directs Treasury to write anti-avoidance rules to limit gaming such as shifting workers to contractor status.