Bill > HR6418

This bill amends the Internal Revenue Code to incentivize profit-sharing by denying tax deductions for executive compensation to employers who do not maintain profit-sharing distributions for employees. Specifically, companies that meet certain gross revenue thresholds would be required to implement a written profit-sharing plan that distributes at least 5% of the company's net income to employees who have worked at least one year. These distributions must be based on the company's financial performance and be structured in a non-discriminatory manner, ensuring fair allocation across employee groups. The bill defines detailed requirements for these "qualified profit-sharing distributions," including provisions that allow exemptions if such distributions would threaten the company's financial stability. Highly compensated executives would not be eligible for tax-deductible compensation unless these profit-sharing requirements are met. The legislation aims to encourage more equitable compensation practices by linking executive pay tax benefits to broader employee financial participation. The changes would take effect for taxable years beginning after the act's enactment, giving companies time to adapt their compensation and profit-sharing strategies.

Budget and Finance

https://www.congress.gov/bill/119th-congress/house-bill/6418/all-info