[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 3176 Introduced in Senate (IS)]

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118th CONGRESS
  1st Session
                                S. 3176

 To amend the Internal Revenue Code of 1986 to impose an excise tax on 
     excessively disparate wages paid to chief executive officers.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            November 1, 2023

 Mr. Whitehouse (for himself, Ms. Warren, and Mr. Merkley) 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 an excise tax on 
     excessively disparate wages paid to chief executive officers.

    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 ``Curtailing Executive 
Overcompensation (CEO) Act''.

SEC. 2. EXCISE TAX ON EXCESSIVE CHIEF EXECUTIVE OFFICER PAY DISPARITY.

    (a) In General.--Subtitle D of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new chapter:

                      ``CHAPTER 50B--PAY DISPARITY

``Sec. 5000E. Excessive pay disparity.

``SEC. 5000E. EXCESSIVE PAY DISPARITY.

    ``(a) In General.--In the case of any employer which is an 
applicable employer for the calendar year, there is hereby imposed a 
tax equal to the lesser of--
            ``(1) 1 percent of the product of--
                    ``(A) the pay disparity factor of the applicable 
                employer for the calendar year, and
                    ``(B) the excess of--
                            ``(i) amount determined under subsection 
                        (c)(2)(A) for such calendar year, over
                            ``(ii) 5,000 percent of the amount 
                        determined under subsection (c)(2)(B) for such 
                        calendar year, or
            ``(2) 1 percent of the gross receipts (within the meaning 
        of section 448(c)) of such applicable employer.
    ``(b) Applicable Employer.--
            ``(1) In general.--For purposes of this section, the term 
        `applicable employer' means, with respect to any calendar year, 
        any employer which--
                    ``(A) has not less than $100,000,000 in gross 
                receipts (within the meaning of section 448(c)) for 
                each of the 3 calendar years preceding such calendar 
                year, and
                    ``(B) has paid wages in excess of $10,000,000 for 
                each calendar year in the 3-calendar-year period taken 
                into account under subparagraph (A).
            ``(2) Aggregation rule.--For purposes of this section, the 
        rules of subsection (a) and (b) of section 52 shall apply.
            ``(3) Predecessors.--For purposes of paragraph (1)(A), 
        rules similar to the rules of section 448(c)(3)(D) shall apply.
            ``(4) Inflation adjustment.--
                    ``(A) In general.--In the case of any calendar year 
                after 2024, the $100,000,000 amount under paragraph 
                (1)(A) and the $10,000,000 amount under paragraph 
                (1)(B) shall each be increased by an amount equal to--
                            ``(i) such dollar amount, multiplied by
                            ``(ii) the cost-of-living adjustment 
                        determined under section 1(f)(3) for such 
                        calendar year, determined by substituting 
                        `calendar year 2023' for `calendar year 2016' 
                        in subparagraph (A)(ii) thereof.
                    ``(B) Rounding.--The amount of any increase under 
                clause (i) shall be rounded to the nearest multiple of 
                $100,000.
    ``(c) Pay Disparity Factor.--For purposes of this section--
            ``(1) In general.--The term `pay disparity factor' means, 
        with respect to any applicable employer for calendar year, the 
        excess (if any) of--
                    ``(A) the pay disparity ratio of such employer for 
                such calendar year, over
                    ``(B) 50.
            ``(2) Pay disparity ratio.--The term `pay disparity ratio' 
        means, with respect to any applicable employer for calendar 
        year, the ratio of--
                    ``(A) the average qualified wages for the 5-
                calendar year period ending with such calendar year of 
                the individual who is the highest compensated employee 
                of the applicable employer for such calendar year, to
                    ``(B) the median wages paid to all applicable 
                employees of the applicable employer for such calendar 
                year.
            ``(3) Wages; qualified wages.--
                    ``(A) Wages.--The term `wages' has the meaning 
                given such term under section 3401(a), determined 
                without regard to paragraph (8) thereof.
                    ``(B) Qualified wages.--
                            ``(i) In general.--The term `qualified 
                        wages' means wages increased by--
                                    ``(I) any elective deferrals 
                                (within the meaning of section 
                                402(g)(3)) not included in wages, and
                                    ``(II) any amounts described in 
                                section 415(c)(3)(D)(ii) which are not 
                                included in wages.
                            ``(ii) Self-employed individuals and owner-
                        employees.--In the case of an employee (within 
                        the meaning of section 401(c)(1)), the term 
                        `qualified wages' includes the earned income 
                        (as defined in section 401(c)(2) of such 
                        employee, but determined without regard to any 
                        exclusion under section 911) of such employee.
            ``(4) Applicable employee.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `applicable employee' 
                means any individual whose wages in connection with 
                services performed for the applicable employer for the 
                calendar year are equal to or more than $5,000.
                    ``(B) Inflation adjustment.--
                            ``(i) In general.--In the case of any 
                        calendar year after 2024, the $5,000 amount 
                        under subparagraph (A)(ii) shall be increased 
                        by an amount equal to--
                                    ``(I) such dollar amount, 
                                multiplied by
                                    ``(II) the cost-of-living 
                                adjustment determined under section 
                                1(f)(3) for such calendar year, 
                                determined by substituting `calendar 
                                year 2023' for `calendar year 2016' in 
                                subparagraph (A)(ii) thereof.
                            ``(ii) Rounding.--The amount of any 
                        increase under clause (i) shall be rounded to 
                        the nearest multiple of $100.
    ``(d) Joint and Several Liability.--If more than one taxpayer is 
treated as a single employer under this section by reason of subsection 
(b)(2), then each such taxpayer shall be jointly and severally liable 
for the tax imposed by subsection (a).
    ``(e) Regulations.--The Secretary shall issue regulations as 
necessary to prevent avoidance of the purposes of this section, 
including regulations to prevent the manipulation of the pay disparity 
factor by changes to the composition of the workforce (including by 
using the services of contractors rather than employees).''.
    (b) No Deduction From Income Taxes.--Section 275(a)(6) of the 
Internal Revenue Code of is amended by inserting ``50B,'' after 
``50A,''.
    (c) Clerical Amendment.--The table of chapters for subtitle D of 
the Internal Revenue Code of 1986 is amended by adding at the end the 
following new item:

                    ``Chapter 50B--Pay Disparity''.

    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.
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