109 HR 3260 IH: Income Equity Act of 2005 U.S. House of Representatives 2005-07-12 text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.

I 109th CONGRESS 1st Session H. R. 3260 IN THE HOUSE OF REPRESENTATIVES July 12, 2005 Mr. Sabo introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to deny employers a deduction for payments of excessive compensation.

1.

Short title

This Act may be cited as the Income Equity Act of 2005.

2.

Denial of deduction for payments of excessive compensation

(a)

In general

Section 162 of the Internal Revenue Code of 1986 (relating to deduction for trade or business expenses) is amended by inserting after subsection (h) the following new subsection: (i)

Excessive compensation

(1)

In general

No deduction shall be allowed under this chapter for any excessive compensation with respect to any full-time employee. (2)

Excessive compensation

For purposes of this subsection, the term excessive compensation means, with respect to any employee, the amount by which— (A)the compensation for services performed by such employee during the taxable year, exceeds (B)an amount equal to 25 times the lowest compensation for services performed by any other full-time employee during such taxable year. (3)

Definitions and special rules

For purposes of this subsection— (A)

Compensation

(i)

In general

The term compensation means salary, wages, and bonuses. (ii)

Inclusion of noncash benefits

The term compensation includes any remuneration (including benefits) in any medium other than cash, but shall not include— (I)any payment referred to in so much of section 3121(a)(5) as precedes subparagraph (E) thereof, and (II)any benefit provided to or on behalf of an employee if at the time such benefit is provided it is reasonable to believe that the employee will be able to exclude such benefit from gross income under this chapter. (iii)

Part-year employees

In the case of any part-year employee, the compensation of the employee shall be computed on an annualized basis. (B)

Employer

All persons treated as a single employer under subsection (a) or (b) of section 52 or subsection (m) or (o) of section 414 shall be treated as 1 employer.. (b)

Effective date

The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.