Sponsors (30)
The bill increases transparency and incentivizes more equitable CEO-to-worker pay for large firms while raising revenue and strengthening anti-avoidance enforcement, but it also raises costs for targeted corporations that could be passed to consumers/workers, reduce investment or hiring, and create size-based incentives to restructure.
Workers and investors at large private companies will get clearer information because firms with ≥$100M in receipts must report CEO-to-median-worker pay ratios, increasing corporate pay transparency.
Large corporations that keep CEO-to-median-worker pay ratios at or below 50:1 avoid penalties, creating a direct incentive for big firms to adopt more equitable pay practices.
Taxpayers and the federal budget benefit because penalties on firms with high pay ratios raise additional federal revenue that could fund services or reduce deficits.
Consumers and employees may face higher costs because targeted large corporations could pass higher corporate taxes on to customers through higher prices or to workers through reduced pay or jobs.
Workers and job-seekers could see fewer hiring or investment opportunities if tax increases on targeted corporations reduce those firms' investment or hiring, potentially slowing local economic growth.
Large private companies will face increased administrative and compliance costs from reporting and meeting the new obligations, imposing burdens on business operations.
Based on analysis of 2 sections of legislative text.
Raises the corporate income tax rate for C corporations whose CEO-to-median-worker pay ratio (5-year average) exceeds 50:1, with large private firms included if average gross receipts ≥ $100M.
Imposes an extra corporate income tax on C corporations whose CEO-to-median-worker pay ratio exceeds 50:1 by increasing the base corporate rate for that firm by a penalty amount. The bill defines the pay ratio using SEC rules with a 5-year averaged compensation calculation, extends reporting to large private firms (three-year average gross receipts ≥ $100M), requires Treasury anti-avoidance regulations, and takes effect for taxable years beginning after Dec 31, 2025.
Official title: To amend the Internal Revenue Code of 1986 to impose a corporate tax rate increase on companies whose ratio of compensation of the CEO or other highest paid employee to median worker compensation is more than 50 to 1, and for other purposes.
Introduced September 11, 2025 by Rashida Tlaib · Last progress September 11, 2025