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This bill — the Tax Excessive CEO Pay Act — would raise the corporate tax rate on companies that pay their top executives over 50 times more than what they pay their most typical workers. The penalty would rise on a sliding scale, with a minimum of a 0.5% increase for companies with a compensation ratio of more than 50 but less than 100 to a 5% increase for companies with a compensation ratio of more than 500.

The full tax penalty structure under this bill would be:

For companies with a compensation ratio more than 50, but not more than 100: +0.5% increase in corporate tax rate.
For companies with a compensation ratio more than 100, but not more than 200: +1% increase in corporate tax rate.
For companies with a compensation ratio more than 200, but not more than 300; +2% increase in corporate tax rate.
For companies with a compensation ratio more than more than 300, but not more than 400: +3% increase in corporate tax rate.
For companies with a compensation ratio more than 400, but not more than 500: +4% increase in corporate tax rate.
For companies with a compensation ratio more than 500: +5% increase in corporate tax rate.

This bill would apply to both publicly traded and privately held corporations with average annual gross receipts of at least $100 million for the three preceding years. This would make it the first time ever that such corporations would have to reveal the ratio between their CEO and median worker pay.

To prevent avoidance, this bill would direct the Treasury Dept. to issue regulations to prevent avoidance of this bill’s requirements. The Treasury Dept. would receive a specific grant of authority to address situations where companies manipulate their CEO-to-worker pay ratio due to the use of contractors or any other technique.

Corporations’ compensation ratios would be calculated as a ratio of CEO compensation to median employee compensation, as defined by SEC rules. If a company’s CEO didn’t receive a firm’s largest paycheck (as is the case at companies like Google and Twitter, where CEOs and founders take only nominal annual pay), the annual earnings of the highest-paid employee would replace the CEO compensation in the compensation ratio calculation.

","official_title":"A bill 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.","short_title":"Tax Excessive CEO Pay Act of 2019","popular_title":null,"short_summary":"Tax Excessive CEO Pay Act of 2019 This bill requires an increase in the corporate income tax rate based upon the ratio of compensation paid to the corporation's highest paid employee to median worker compensation. The pay ratios range from greater than 50 to 1 (0.5% increase) to greater than 500 to 1 (5% increase). The bill exempts corporations whose average annual gross receipts during a three-year period are less than $100 million from the rate increase. 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Should Corporations’ Tax Rates Increase if Executives are Paid Excessively?