H.R. 5019

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5019 Introduced in House (IH)]

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119th CONGRESS
1st Session
H. R. 5019

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.

_______________________________________________________________________

IN THE HOUSE OF REPRESENTATIVES

August 22, 2025

Mr. DeSaulnier introduced the following bill; which was referred to the 
Committee on Ways and Means, and in addition to the Committee on 
Oversight and Government Reform, for a period to be subsequently 
determined by the Speaker, in each case for consideration of such 
provisions as fall within the jurisdiction of the committee concerned

_______________________________________________________________________

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.

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 ``CEO Accountability and 
Responsibility Act''.

SEC. 2. INCOME TAX RATE OF PUBLICLY TRADED CORPORATIONS BASED ON 
COMPENSATION RATIO.

(a) In General.--Section 11 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following:
``(e) Tax Rate of Publicly Traded Corporations Based on 
Compensation Ratio.--
``(1) In general.--In the case of a publicly traded 
corporation (as defined in section 162(m)(2)), in the amount of 
tax under subsection (b) shall be determined--
``(A) by adjusting the highest rate of tax 
applicable to the taxpayer by the percentage point 
adjustment specified in paragraph (2), and
``(B) by making proper adjustments to--
``(i) the dollar amount in clause (ii) of 
the second sentence of paragraph (1), and
``(ii) the dollar amount in clause (ii) of 
the third sentence of paragraph (1).
``(2) Adjustment of tax rate.--For purposes of paragraph 
(1), the percentage points specified in this paragraph shall be 
determined as follows:

------------------------------------------------------------------------
The percentage point
``If the compensation ratio is: 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.
------------------------------------------------------------------------

``(3) Definitions.--For purposes of this subsection--
``(A) Compensation ratio.--The term `compensation 
ratio' means, with respect to any taxable year, a 
ratio--
``(i) the numerator of which is the amount 
equal to the greater of the compensation of the 
chief executive officer or the highest paid 
employee of the taxpayer for the calendar year 
preceding the beginning of the taxable year, 
and
``(ii) 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.
``(B) Compensation.--
``(i) Employees.--In the case of employees 
of the taxpayer other than the chief executive 
officer or the highest paid employee, the term 
`compensation' means wages (as defined in 
section 3121(a)) paid by the taxpayer during a 
calendar year.
``(ii) CEO and highest paid employee.--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.
``(4) Special rule if contracted or foreign employee ratio 
increases.--
``(A) In general.--If--
``(i) 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
``(ii) 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.
``(B) Definitions.--For purposes of this 
paragraph--
``(i) Annual full-time equivalent.--The 
term `annual full-time equivalent' means--
``(I) 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
``(II) in the case of a salaried 
full-time employee, the total number of 
weeks worked for the taxpayer by the 
employee divided by 52.
``(ii) Contracted full-time employee.--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.
``(iii) Foreign full-time employee.--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.
``(iv) Full-time employee.--The term `full-
time employee' means an employee of the 
taxpayer that either--
``(I) is paid compensation by the 
taxpayer for services of not less than 
an average of 35 hours per week, or
``(II) is a salaried employee of 
the taxpayer and is paid compensation 
during the taxable year for full-time 
employment.
``(5) Controlled groups.--For purposes of this subsection, 
all persons treated as a single employer under subsection (b), 
(c), (m) or (o) of section 414 shall be treated as one person.
``(6) Reports.--The taxpayer shall furnish such reports to 
the Secretary with respect to compensation and such other 
matters as the Secretary may require. The reports required by 
this subsection shall be filed at such time and in such manner 
as may be required by the Secretary.
``(7) Regulations.--The Secretary shall prescribe such 
regulations and other guidance as may be necessary or 
appropriate to carry out this subsection, including any 
guidelines regarding the determination of wages, average 
compensation, and compensation ratio.''.
(b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 3. CONTRACTING PREFERENCE FOR ENTITIES WITH CERTAIN PAY RATIOS.

(a) Amendment.--Chapter 47 of title 41, United States Code, is 
amended by inserting after section 4714 the following new section:
``Sec. 4715. Preference for entities with certain pay ratios
``(a) Preference.--In the evaluation of bids or proposals for a 
contract for the procurement of goods or services, the head of an 
executive agency shall provide a preference to an entity that for the 
previous calendar year has a compensation ratio of less than 50-to-1.
``(b) Compensation Ratio Defined.--In this section, the term 
`compensation ratio' has the meaning given that term in section 
11(e)(3)(A) of the Internal Revenue Code of 1986, except the ratio 
determined for the calendar year preceding the calendar year of the 
contract to which this section applies.''.
(b) Clerical Amendment.--The table of sections at the beginning of 
such chapter is amended by inserting after the item relating to section 
4714 the following new item:

``4715. Preference for entities with certain pay ratios.''.
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