CEO Accountability and Responsibility Act
This bill increases the corporate income tax rate for publicly traded corporations that pay their chief executive officers or highest paid employees more than 100 times the median compensation of all their U.S. employees or that increase the number of contracted or foreign employees.
The bill also requires an executive agency, in the evaluation of bids or proposals for federal contracts, to give preference to a bidder that has a compensation ratio of highly paid to all employees of less than 50 to 1 in the previous calendar year.
[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3301 Introduced in House (IH)]
<DOC>
117th CONGRESS
1st Session
H. R. 3301
To amend the Internal Revenue Code of 1986 to adjust the rate of income
tax of a publicly traded corporation based on the ratio of compensation
of the corporation's highest paid employee to the median compensation
of all the corporation's employees, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 18, 2021
Mr. DeSaulnier introduced the following bill; which was referred to the
Committee on Ways and Means, and in addition to the Committee on
Oversight and Reform, for a period to be subsequently determined by the
Speaker, in each case for consideration of such provisions as fall
within the jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to adjust the rate of income
tax of a publicly traded corporation based on the ratio of compensation
of the corporation's highest paid employee to the median compensation
of all the corporation's employees, 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 ``CEO Accountability and
Responsibility Act''.
SEC. 2. INCOME TAX RATE OF PUBLICLY TRADED CORPORATIONS 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:
``(e) Tax Rate of Publicly Traded Corporations Based on
Compensation Ratio.--
``(1) In general.--In the case of a publicly traded
corporation (as defined in section 162(m)(2)), in the amount of
tax under subsection (b) shall be determined--
``(A) by adjusting the highest rate of tax
applicable to the taxpayer by the percentage point
adjustment specified in paragraph (2), and
``(B) by making proper adjustments to--
``(i) the dollar amount in clause (ii) of
the second sentence of paragraph (1), and
``(ii) the dollar amount in clause (ii) of
the third sentence of paragraph (1).
``(2) Adjustment of tax rate.--For purposes of paragraph
(1), the percentage points specified in this paragraph shall be
determined as follows:
------------------------------------------------------------------------
The percentage point
``If the compensation ratio is: adjustment is:
------------------------------------------------------------------------
More than 100 but not more than 150..... +0.5 percentage points
More than 150 but not more than 200..... +1 percentage points
More than 200 but not more than 250..... +1.5 percentage points
More than 250 but not more than 300..... +2 percentage points
More than 300 but not more than 400..... +2.5 percentage points
More than 400........................... +3 percentage points.
------------------------------------------------------------------------
``(3) Definitions.--For purposes of this subsection--
``(A) Compensation ratio.--The term `compensation
ratio' means, with respect to any taxable year, a
ratio--
``(i) the numerator of which is the amount
equal to the greater of the compensation of the
chief executive officer or the highest paid
employee of the taxpayer for the calendar year
preceding the beginning of the taxable year,
and
``(ii) the denominator of which is the
amount equal to the median compensation of all
employees employed by the taxpayer in the
United States for the calendar year preceding
the beginning of the taxable year.
``(B) Compensation.--
``(i) Employees.--In the case of employees
of the taxpayer other than the chief executive
officer or the highest paid employee, the term
`compensation' means wages (as defined in
section 3121(a)) paid by the taxpayer during a
calendar year.
``(ii) CEO and highest paid employee.--In
the case of the chief executive officer and the
highest paid employee of the taxpayer, the term
`compensation' means total compensation for the
calendar year, as reported in the Summary
Compensation Table reported to the Securities
and Exchange Commission pursuant to Item 402 of
Regulation S-K of the Securities and Exchange
Commission.
``(4) Special rule if contracted or foreign employee ratio
increases.--
``(A) In general.--If--
``(i) the total number of full-time
employees, determined on an annual full-time
equivalent basis, employed by the taxpayer in
the United States for a taxable year is reduced
by more than 10 percent, as compared to the
total number of full-time employees, determined
on an annual full-time equivalent basis,
employed by the taxpayer in the United States
for the preceding taxable year, and
``(ii) the total number of contracted
employees or foreign full-time employees,
determined on an annual full-time equivalent
basis, of the taxpayer for that taxable year
has increased, as compared with the total
number of contracted employees or foreign full-
time employees, determined on an annual full-
time equivalent basis, of the taxpayer for the
preceding taxable year,
then the applicable tax rate determined under paragraph
(2) shall be increased by 50 percent. For taxpayers who
first commence doing business during the taxable year,
the number of full-time employees, contracted
employees, and foreign full-time employees for the
immediately preceding prior taxable year shall be zero.
``(B) Definitions.--For purposes of this
paragraph--
``(i) Annual full-time equivalent.--The
term `annual full-time equivalent' means--
``(I) in the case of a full-time
employee paid hourly qualified wages,
the total number of hours worked for
the taxpayer by the employee, not to
exceed 2,000 hours per employee,
divided by 2,000, and
``(II) in the case of a salaried
full-time employee, the total number of
weeks worked for the taxpayer by the
employee divided by 52.
``(ii) Contracted full-time employee.--The
term `contracted full-time employee' means an
individual engaged by the taxpayer to provide a
specific set of services established pursuant
to the terms and conditions of a written
employment contract that delineates the length
of employment, the salary and bonuses (if any)
to be paid, and the benefits that accrue to
that individual.
``(iii) Foreign full-time employee.--The
term `foreign full-time employee' means a full-
time employee of the taxpayer that is employed
at a location other than the United States.
``(iv) Full-time employee.--The term `full-
time employee' means an employee of the
taxpayer that either--
``(I) is paid compensation by the
taxpayer for services of not less than
an average of 35 hours per week, or
``(II) is a salaried employee of
the taxpayer and is paid compensation
during the taxable year for full-time
employment.
``(5) Controlled groups.--For purposes of this subsection,
all persons treated as a single employer under subsection (b),
(c), (m) or (o) of section 414 shall be treated as one person.
``(6) Reports.--The taxpayer shall furnish such reports to
the Secretary with respect to compensation and such other
matters as the Secretary may require. The reports required by
this subsection shall be filed at such time and in such manner
as may be required by the Secretary.
``(7) Regulations.--The Secretary shall prescribe such
regulations and other guidance as may be necessary or
appropriate to carry out this subsection, including any
guidelines regarding the determination of wages, average
compensation, and compensation ratio.''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to taxable years beginning after the date of the enactment of
this Act.
SEC. 3. CONTRACTING PREFERENCE FOR ENTITIES WITH CERTAIN PAY RATIOS.
(a) Amendment.--Chapter 47 of title 41, United States Code, is
amended by inserting after section 4714 the following new section:
``Sec. 4715. Preference for entities with certain pay ratios
``(a) Preference.--In the evaluation of bids or proposals for a
contract for the procurement of goods or services, the head of an
executive agency shall provide a preference to an entity that for the
previous calendar year has a compensation ratio of less than 50-to-1.
``(b) Compensation Ratio Defined.--In this section, the term
`compensation ratio' has the meaning given that term in section
11(e)(3)(A) of the Internal Revenue Code of 1986, except the ratio
determined for the calendar year preceding the calendar year of the
contract to which this section applies.''.
(b) Clerical Amendment.--The table of sections at the beginning of
such chapter is amended by inserting after the item relating to section
4714 the following new item:
``4715. Preference for entities with certain pay ratios.''.
<all>
Introduced in House
Introduced in House
Referred to the Committee on Ways and Means, and in addition to the Committee on Oversight and Reform, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Ways and Means, and in addition to the Committee on Oversight and Reform, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
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