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Imposes a surcharge on the federal corporate income tax rate for C corporations whose CEO-to-worker pay ratio exceeds 50-to-1. The bill raises the 21% corporate rate by an added percentage (set by a table in the text) when a corporation’s five‑year average pay ratio is greater than 50:1, with calculation rules tied to the SEC pay‑ratio regulation and special rules for privately held firms. Exempts corporations with average annual gross receipts under $100 million, requires Treasury to write anti‑avoidance regulations (including rules about contractors and workforce manipulation), updates related Code cross‑references, and applies to taxable years beginning after December 31, 2025.
The bill uses a surtax on large corporations with high CEO-to-worker pay ratios to discourage extreme pay disparities and raise federal revenue, but it risks higher consumer prices, workforce restructuring to avoid the tax, increased compliance costs, and lower investor returns.
Employees at publicly traded companies and large private firms (average annual gross receipts ≥ $100M or SEC filers) may see reduced CEO-to-worker pay gaps and could benefit from higher wages or more hiring if corporations respond to the surcharge by increasing lower‑paid worker compensation.
Taxpayers may benefit from additional federal revenue collected from large corporations with high pay ratios, which could be used for public services or deficit reduction.
Smaller private firms and most small-business owners are protected from the surcharge because it applies only to corporations with average annual gross receipts of $100M or more (or SEC filers), limiting burdens on small businesses.
Consumers and middle‑class families may face higher prices, and the economy could see reduced corporate investment and hiring, because some corporations will pass the higher tax costs onto customers or cut spending.
Employees, gig and freelance workers could lose protections or benefits if firms restructure their workforce (e.g., shift to contractors or change employment arrangements) to avoid the surcharge.
Shareholders and financial institutions may see lower after‑tax returns, and the tax changes could complicate cross‑border tax planning and rules (including impacts to REITs, RICs, section 7874, and withholding), raising investor and financial-sector costs.
Introduced September 11, 2025 by Rashida Tlaib · Last progress September 11, 2025