Bill > S2818

This bill introduces a new tax mechanism for corporations based on the compensation ratio between their highest-paid employee and median worker pay, aiming to discourage extreme income inequality. Specifically, the bill would increase corporate tax rates for companies with a pay ratio greater than 50 to 1, with the tax penalty escalating as the ratio increases. For companies with a pay ratio between 50:1 and 100:1, the corporate tax rate would increase by 0.5 percentage points, with incremental increases up to a 5 percentage point increase for companies with pay ratios exceeding 500:1. The bill applies to corporations with average annual gross receipts of $100 million or more and requires these companies to calculate and report their pay ratio using methods specified by the Treasury Department. Large private corporations not currently subject to SEC filing requirements would need to calculate their ratio according to new regulations. The tax increase would take effect for taxable years beginning after December 31, 2025, and the Treasury is directed to develop regulations to prevent companies from manipulating their workforce composition to avoid the tax penalty, such as by replacing employees with contractors.

Budget and Finance

https://www.congress.gov/bill/119th-congress/senate-bill/2818/all-info