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The bill increases corporate transparency and taxes extreme executive-to-worker pay ratios to raise revenue and incentivize fairer pay, but it risks higher consumer prices, workforce restructuring, reduced investment, and added compliance burdens for businesses.
Private companies with average receipts ≥ $100M must report executive-to-worker pay ratios, increasing corporate pay transparency for taxpayers and businesses.
Large corporations with pay ratios above 50:1 will face higher federal corporate tax rates, generating additional revenue for taxpayers.
By financially penalizing very high executive-to-worker pay gaps, the bill creates incentives for narrower pay disparities and could encourage higher worker compensation or more equitable pay practices.
Companies subject to higher tax rates may pass increased costs to consumers through higher prices or reduce hiring, raising household expenses and worsening employment outcomes.
Firms may restructure (use contractors, outsource, or change workforce composition) to avoid the tax, potentially reducing job security, benefits, and stable employment for workers.
Higher corporate taxes on firms with extreme pay ratios reduce after-tax profits available for investment or wages, which could slow business investment and longer-term economic growth.
Imposes an extra corporate tax when a company’s CEO-to-worker pay ratio is greater than 50:1 by increasing the 21% corporate tax rate by a penalty tied to the pay ratio. Large public companies use the SEC pay-ratio method modified to use a five-year average; large private companies with at least $100 million average receipts must follow Treasury rules; firms under that threshold are exempt. Applies to taxable years beginning after December 31, 2025, and directs the Treasury to write regulations including anti-avoidance rules to stop companies from changing workforce mix or using contractors to dodge the ratio.
Introduced September 16, 2025 by Bernard Sanders · Last progress September 16, 2025