II 

117TH CONGRESS 

1ST SESSION S. 794 

To amend the Internal Revenue Code of 1986 to impose a corporate tax 

rate increase on companies whose ratio of compensation of the CEO 

or other highest paid employee to median worker compensation is more 

than 50 to 1, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

MARCH 17 (legislative day, MARCH 16), 2021 

Mr. SANDERS (for himself, Ms. WARREN, Mr. VAN HOLLEN, and Mr. MARKEY) 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 

a corporate tax rate increase on companies whose ratio 

of compensation of the CEO or other highest paid employee to median worker compensation is more than 50 

to 1, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Tax Excessive CEO 

5 Pay Act of 2021’’. 


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1 SEC. 2. CORPORATE TAX INCREASE BASED ON COMPENSA2 TION RATIO. 

3 (a) IN GENERAL.—Section 11 of the Internal Rev4 enue Code of 1986 is amended by adding at the end the 

5 following new subsection: 

6 ‘‘(e) TAX INCREASE BASED ON PAY RATIO.— 

7 ‘‘(1) IN GENERAL.— 

8 ‘‘(A) INCREASE IMPOSED.—In the case of 

9 any corporation (except as provided in subpara10 graph (B)(ii)(II)) the pay ratio of which is 

11 greater than 50 to 1 for a taxable year, the 21 

12 percent rate under subsection (b) for such tax13 able year shall be increased by the penalty de14 termined under paragraph (2). 

15 ‘‘(B) PAY RATIO.—For purposes of this 

16 subsection— 

17 ‘‘(i) IN GENERAL.—The term ‘pay 

18 ratio’ means the ratio described in section 

19 229.402(u)(1)(iii) of title 17, Code of Fed20 eral Regulations (or any successor there21 to), except that if the highest compensated 

22 employee of the corporation is not the 

23 principal executive officer, the ratio shall 

24 be determined based on the compensation 

25 of such highest compensated employee. 


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1 ‘‘(ii) CORPORATIONS NOT SUBJECT TO

2 SEC FILING.—In the case of a corporation 

3 which (without regard to this clause) is not 

4 subject to the authorities described in sec5 tion 229.10(a) of title 17, Code of Federal 

6 Regulations (or any successor thereto)— 

7 ‘‘(I) LARGE CORPORATIONS.—If 

8 the average annual gross receipts of 

9 such corporation for the 3-taxable10 year period ending with the taxable 

11 year which precedes such taxable year 

12 are at least $100,000,000, such cor13 poration shall calculate and report its 

14 pay ratio according to the method 

15 which the Secretary shall prescribe by 

16 regulations consistent with the regula17 tion described in clause (i). 

18 ‘‘(II) OTHER PRIVATE CORPORA19 TIONS EXEMPT.—Subparagraph (A) 

20 shall not apply to any such corpora21 tion if the average annual gross re22 ceipts of such corporation for the 3- 

23 taxable-year period ending with the 

24 taxable year which precedes such tax25 able year are less than $100,000,000. 


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1 ‘‘(2) AMOUNT OF PENALTY.—The penalty de2 termined under this paragraph is an increase, ex3 pressed in percentage points, determined in accord4 ance with the following table: 

‘‘If the pay ratio is: The increase is: 

Greater than 50 to 1, but not greater than 100 to 1 ................. 0.5

Greater than 100 to 1, but not greater than 200 to 1 ............... 1

Greater than 200 to 1, but not greater than 300 to 1 ............... 2

Greater than 300 to 1, but not greater than 400 to 1 ............... 3

Greater than 400 to 1, but not greater than 500 to 1 ............... 4

Greater than 500 to 1 ................................................................. 5.’’. 

5 (b) CONFORMING AMENDMENTS.— 

6 (1) The following sections of the Internal Rev7 enue Code of 1986 are each amended by inserting 

8 ‘‘applicable to the corporation (after the application 

9 of section 11(e))’’ after ‘‘section 11(b)’’: 

10 (A) Section 280C(c)(3)(B)(ii)(II). 

11 (B) Paragraphs (2)(B) and (6)(A)(ii) of 

12 section 860E(e). 

13 (C) Section 7874(e)(1)(B). 

14 (2) Section 852(b)(3)(A) of such Code is 

15 amended by inserting ‘‘(after the application of sec16 tion 11(e))’’ after ‘‘section 11(b)’’. 

17 (3) Paragraphs (1) and (2) of section 

18 1445(e)(1) of such Code are each amended by strik19 ing ‘‘in effect for the taxable year under section 

20 11(b)’’ and inserting ‘‘applicable to such corporation 

21 under section 11 for the taxable year’’. 


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1 (4) Section 1446(b)(2)(B) of such Code is 

2 amended by striking ‘‘specified in section 11(b)’’ and 

3 inserting ‘‘applicable to such corporation under sec4 tion 11 for the taxable year’’. 

5 (c) EFFECTIVE DATE.—The amendments made by 

6 this section shall apply to taxable years beginning after 

7 December 31, 2021. 

8 (d) REGULATIONS.—The Secretary of the Treasury 

9 (or the Secretary’s delegate) shall issue regulations as nec10 essary to prevent avoidance of the purposes of the amend11 ments made by subsection (a), including regulations to 

12 prevent the manipulation of the compensation ratio under 

13 section 11(e) of the Internal Revenue Code of 1986 by 

14 changes to the composition of the workforce (including by 

15 using the services of contractors rather than employees). 

Æ 


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