Curtailing Executive Overcompensation (CEO) Act

Excise tax on excessive CEO pay

This bill would create a new annual excise tax on large employers when CEO pay is very high compared with typical worker pay. An "applicable employer" would be one with at least $100 million in gross receipts and over $10 million in wages in each of the prior three years. An "applicable employee" would be anyone paid $5,000 or more in a year. The tax would be the smaller of two amounts. One amount would be 1% times a pay-disparity factor times how much the 5-year average top pay exceeds 50 times the median worker pay. The other amount would be 1% of the employer's gross receipts for the calendar year. Qualified wages would include wages plus some retirement deferrals, and self-employed or owner-employees could use earned income for the top-pay numerator. The bill would disallow an income-tax deduction for this excise and would direct the Treasury to issue rules to prevent avoidance, including workforce-composition changes. These rules would apply to taxable years beginning after the date of enactment, and the dollar tests would be inflation-adjusted after 2027.