119-s2818

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 2818 Introduced in Senate

    (IS) ]

<DOC>

119th CONGRESS
 1st Session
 S. 2818

 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.

_______________________________________________________________________

 IN THE SENATE OF THE UNITED STATES

 September 16, 2025

 Mr. Sanders (for himself, Ms. Warren, Mr. Van Hollen, Mr. Markey, and 
 Mr. Welch) introduced the following bill; which was read twice and 
 referred to the Committee on Finance

_______________________________________________________________________

 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.

 Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

 This Act may be cited as the ``Tax Excessive CEO Pay Act of 2025''.

SEC. 2. CORPORATE TAX INCREASE BASED ON COMPENSATION RATIO.

    (a) In General.--

Section 11 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new subsection:
 ``

    (e) Tax Increase Based on Pay Ratio.--
 ``

    (1) In general.--
 ``
        (A) Increase imposed.--In the case of any 
 corporation (except as provided in subparagraph
        (B)
            (ii) 
            (II) ) the pay ratio of which is greater than 50 
 to 1 for a taxable year, the 21 percent rate under 
 subsection

    (b) for such taxable year shall be increased 
 by the penalty determined under paragraph

    (2) .
 ``
        (B) Pay ratio.--For purposes of this subsection--
 ``
            (i) In general.--The term `pay ratio' 
 means the ratio described in 

section 229.402

    (u)

    (1)
            (iii) of title 17, Code of Federal 
 Regulations (or any successor thereto), except 
 that--
 ``
            (I) such ratio shall be 
 determined with respect to any taxable 
 year using the annualized average of 
 the compensation amounts described in 
 such section during the 5-year period 
 ending on the last day of the taxable 
 year, and
 ``
            (II) if the highest compensated 
 employee of the corporation is not the 
 principal executive officer, the ratio 
 shall be determined based on the 
 compensation of such highest 
 compensated employee.
 ``
            (ii) Corporations not subject to sec 
 filing.--In the case of a corporation which 
 (without regard to this clause) is not subject 
 to the authorities described in 

section 229.10

    (a) of title 17, Code of Federal 
 Regulations (or any successor thereto)--
 ``
            (I) Large corporations.--If the 
 average annual gross receipts of such 
 corporation for the 3-taxable-year 
 period ending with the taxable year 
 which precedes such taxable year are at 
 least $100,000,000, such corporation 
 shall calculate and report its pay 
 ratio according to the method which the 
 Secretary shall prescribe by 
 regulations consistent with the 
 regulation described in clause
            (i) .
 ``
            (II) Other private corporations 
 exempt.--Subparagraph
        (A) shall not 
 apply to any such corporation if the 
 average annual gross receipts of such 
 corporation for the 3-taxable-year 
 period ending with the taxable year 
 which precedes such taxable year are 
 less than $100,000,000.
 ``

    (2) Amount of penalty.--The penalty determined under this 
 paragraph is an increase, expressed in percentage points, 
 determined in accordance with the following table:

``If the pay ratio is: The increase is:
 Greater than 50 to 1, but not greater than 100 to 1 0.5 
 Greater than 100 to 1, but not greater than 200 to 1 
 1.
 Greater than 200 to 1, but not greater than 300 to 2 
 1.
 Greater than 300 to 1, but not greater than 400 to 3 
 1.
 Greater than 400 to 1, but not greater than 500 to 4 
 1.
 Greater than 500 to 1.............................. 5.''.

    (b) Conforming Amendments.--

    (1) The following sections of the Internal Revenue Code of 
 1986 are each amended by inserting ``applicable to the 
 corporation (after the application of 

section 11

    (e) )'' after 
 ``

section 11

    (b) '':
        (A) Section 280C
            (c) (2)
        (B)
            (ii) 
            (II) .
        (B) Paragraphs

    (2)
        (B) and

    (6)
        (A)
            (ii) of 

section 860E

    (e) .
            (C) Section 7874

    (e)

    (1)
        (B) .

    (2) Section 852

    (b)

    (3)
        (A) of such Code is amended by 
 inserting ``(after the application of 

section 11

    (e) )'' after 
 ``

section 11

    (b) ''.

    (3) Paragraphs

    (1) and

    (2) of 

section 1445

    (e) of such Code 
 are each amended by striking ``in effect for the taxable year 
 under 

section 11

    (b) '' and inserting ``applicable to such 
 corporation under 

section 11 for the taxable year''.

    (4) Section 1446

    (b)

    (2)
        (B) of such Code is amended by 
 striking ``specified in 

section 11

    (b) '' and inserting 
 ``applicable to such corporation under 

section 11 for the 
 taxable year''.
            (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2025.
            (d) Regulations.--The Secretary of the Treasury (or the Secretary's 
delegate) shall issue regulations as necessary to prevent avoidance of 
the purposes of the amendments made by subsection

    (a) , including 
regulations to prevent the manipulation of the compensation ratio under 

section 11

    (e) of the Internal Revenue Code of 1986 by changes to the 
composition of the workforce (including by using the services of 
contractors rather than employees).
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