[Congressional Record Volume 165, Number 126 (Thursday, July 25, 2019)]
[Senate]
[Page S5110]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. REED (for himself, Mr. Blumenthal, Mr. Whitehouse, Mr. 
        Merkley, Ms. Baldwin, Ms. Warren, Mr. Van Hollen, and Mr. 
        Brown):
  S. 2268. A bill to amend the Internal Revenue Code of 1986 to expand 
the denial of deduction for certain excessive remuneration, and for 
other purposes; to the Committee on Finance.
  Mr. REED. Mr. President, I am introducing the Stop Subsidizing 
Multimillion Dollar Corporate Bonuses Act with Senators Blumenthal, 
Whitehouse, Merkley, Baldwin, Warren, Van Hollen, and Brown. This 
legislation would end special tax deductions for huge executive bonuses 
by closing a loophole that still allows publicly traded corporations to 
deduct the cost of multimillion-dollar bonuses from their corporate tax 
bills. U.S. taxpayers shouldn't have to subsidize these massive 
bonuses.
  Under section 162(m) of the tax code as amended by the 2017 Trump tax 
law (TCJA), when a publicly traded corporation calculates its taxable 
income, it is generally permitted to deduct the cost of compensation 
from its revenues, with limits up to $1 million for some of the firm's 
most senior executives.
  In the last Congress, the TCJA closed some of the pre-existing 162(m) 
loopholes by incorporating provisions from my Stop Subsidizing 
Multimillion Dollar Corporate Bonuses Act, including removing the 
exemption for performance-based compensation, which previously 
permitted compensation deductions above $1 million when executives met 
performance benchmarks set by the corporation's Board of Directors.
  In addition, a technical correction from my bill to ensure that all 
publicly traded corporations that are required to provide quarterly and 
annual reports to their investors under Securities and Exchange 
Commission rules and regulations are subject to section l62(m) was also 
included in the TCJA. Previously, this section of the tax code only 
covered some publicly traded corporations who are required to provide 
these periodic reports to their shareholders.
  While these were positive steps, even more should have been done, 
such as applying section 162(m) to all employees of publicly traded 
corporations so that all compensation is subject to a deductibility cap 
of $1 million. This was the lone provision from my Stop Subsidizing 
Multimillion Dollar Corporate Bonuses Act from the 115th Congress that 
was not incorporated into the Trump tax law.
  Partially closing these 162(m) loopholes saved taxpayers $9.2 billion 
according to the Joint Committee on Taxation (JCT), but according to 
Americans for Tax Fairness, ``Extending the $1 million deductibility 
cap to all forms of compensation for all employees might generate about 
$20 billion over 10 years. This is based on JCT's original $50 billion 
revenue estimate, discounted to $30 billion because of the 40% 
corporate tax cut, and subtracting the $9.2 billion already being 
raised by the TCJA's partial reform.''
  This is why we are introducing a revised version of the Stop 
Subsidizing Multimillion Dollar Corporate Bonuses Act to finish what 
was started. Our legislation would extend section 162(m) to all 
employees of publicly traded corporations so that all compensation is 
subject to a deductibility cap of $1 million. Publicly traded 
corporations would still be permitted to pay their executives as much 
as they desire, but compensation above and beyond $1 million would no 
longer be subsidized by other hardworking taxpayers through our tax 
code.
  Our legislation tackles this issue head on by ending the public 
subsidy of excessive executive compensation. This is simply a matter of 
fairness, ensuring that corporations--and not hardworking taxpayers who 
face their own challenges in this economy--are paying for the multi-
million dollar bonuses corporations have decided to dole out to their 
senior executives.
  We need to prioritize tax breaks that grow our economy and strengthen 
the middle class, and this bill helps eliminate some of the unfairness 
in the tax code.
  I thank Public Citizen, the Institute for Policy Studies, Global 
Economy Project, Americans for Financial Reform, the AFL-CIO, and MIT 
Professor Simon Johnson for their support. I also want to thank Senator 
Blumenthal for working with me on this issue, and I urge our colleagues 
to join us in cosponsoring this legislation.
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