Bill > HB1785

This bill addresses the growing income inequality by imposing a surcharge on publicly traded companies with high executive pay ratios, starting January 1, 2026. The surcharge will apply to companies where the chief executive officer's (CEO) annual compensation is at least 50 times the median employee salary, with two different tax rates: 10% for companies with a pay ratio between 50-150 to one, and 25% for companies with a pay ratio of 150 to one or higher. The executive pay ratio will be calculated using the disclosure requirements from the Dodd-Frank Wall Street Reform and Consumer Protection Act, which mandates companies report the compensation difference between their CEO and median worker. If a company does not disclose its pay ratio, it will automatically be subject to the 25% surcharge. The bill covers both companies that are publicly traded and their subsidiaries, and all revenues collected from this surcharge will be deposited into the state general fund. Additionally, the legislature has requested a report by December 1, 2026, exploring the potential expansion of this act to other taxpayers not currently required to disclose their executive pay ratios. The bill is motivated by the stark disparity in wage growth, noting that CEO pay has increased 1,085 percent since 1978, while median worker wages have only risen by 24 percent during the same period.

Budget and Finance

https://app.leg.wa.gov/billsummary?BillNumber=1785&Year=2025&Initiative=false