Sponsors (6)
The bill imposes higher taxes and reporting requirements on very high CEO-to-worker pay ratios to raise revenue and encourage narrower pay gaps, but risks higher consumer prices, labor shifts, and added compliance and administrative burdens.
Large corporations with very high CEO-to-worker pay ratios will face higher corporate tax rates, generating increased federal revenue that could fund government services or reduce the deficit.
Workers and middle-class families may benefit indirectly as the tax creates a financial incentive for companies to narrow extreme executive-to-worker pay gaps.
Taxpayers and the public will get more information because large private companies (with ≥ $100M receipts) must report averaged pay ratios, increasing transparency of compensation practices.
Consumers and taxpayers may face higher prices or reduced corporate investment because affected companies could pass increased tax burdens on to customers or cut back on investments.
Workers and small employers could see wage compression, reduced staffing, or more contractorization if companies shift costs or restructure to avoid the higher tax.
Affected corporations will face higher compliance costs to calculate and report a 5-year averaged pay ratio and follow new regulations.
Based on analysis of 2 sections of legislative text.
Adds a surtax to the corporate income tax when a firm's executive-to-worker pay ratio exceeds 50:1, measured with a modified SEC pay-ratio rule and applying to private firms with ≥$100M average receipts.
Imposes an extra corporate tax when a company’s executive-to-worker pay ratio exceeds 50:1 by adding percentage points to the corporate income tax rate for that taxable year. The pay ratio is measured using the SEC pay-ratio rule with modifications (a 5-year annualized average and using the highest-paid employee if different from the CEO). Private firms with average annual gross receipts of $100 million or more (3-year lookback) must calculate and report the ratio; smaller private firms are exempt. The change takes effect for taxable years beginning after December 31, 2025, and Treasury must issue anti-avoidance rules to stop manipulation of workforce composition to evade the tax.
Introduced September 16, 2025 by Bernard Sanders · Last progress September 16, 2025