HR 5019
CEO Accountability and Responsibility Act
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Bill overview
This bill, the CEO Accountability and Responsibility Act, proposes to adjust the income tax rate for publicly traded corporations based on the ratio of their highest paid employee’s compensation to the median compensation of all employees. This ratio is calculated annually and, if it exceeds certain thresholds (100-400), the corporate tax rate increases incrementally. The bill also includes a provision to increase the tax rate further if a company reduces its full-time workforce while increasing contracted or foreign employee numbers. Additionally, the bill introduces a preference for companies with a compensation ratio of less than 50-to-1 when bidding on government contracts.
Key provisions
- Increases the corporate income tax rate for publicly traded corporations based on a compensation ratio.
- The compensation ratio is calculated as the highest paid employee’s compensation divided by the median compensation of all employees.
- The tax rate increases incrementally based on the compensation ratio exceeding specific thresholds (100-150, 150-200, 200-250, 250-300, 300-400).
- A 50% increase in the tax rate is triggered if a company reduces its full-time workforce by more than 10% while increasing contracted or foreign full-time employees.
- Defines ‘compensation’ and ‘compensation ratio’ for tax purposes.
- Establishes a rule for determining full-time employee status.
- Introduces a preference for companies with a compensation ratio less than 50-to-1 when bidding on government contracts.
- Requires corporations to furnish reports to the Secretary regarding compensation and other relevant matters.
Who is affected
Sponsors
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Primary sponsor
Cosponsors
Eleanor Holmes [D-DC-At Large] Norton
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119th CONGRESS — 1st Session
H. R. 5019
IN THE HOUSE OF REPRESENTATIVES
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 corporations highest paid employee to the median compensation of all the corporations employees, and for other purposes.
This Act may be cited as the CEO Accountability and Responsibility Act
.
by adjusting the highest rate of tax applicable to the taxpayer by the percentage point adjustment specified in paragraph (2), and
by making proper adjustments to—
the dollar amount in clause (ii) of the second sentence of paragraph (1), and
For purposes of paragraph (1), the percentage points specified in this paragraph shall be determined as follows:
| If the compensation ratio is: | The percentage point 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. |
The term compensation ratio means, with respect to any taxable year, a ratio—
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.
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.
If—
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
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.
For purposes of this paragraph—
The term annual full-time equivalent means—
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
in the case of a salaried full-time employee, the total number of weeks worked for the taxpayer by the employee divided by 52.
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.
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.
The term full-time employee means an employee of the taxpayer that either—
is paid compensation by the taxpayer for services of not less than an average of 35 hours per week, or
is a salaried employee of the taxpayer and is paid compensation during the taxable year for full-time employment.
The amendment made by subsection (a) shall apply to taxable years beginning after the date of the enactment of this Act.