I 

111TH CONGRESS 

1ST SESSION H. R. 1594 

To amend the Internal Revenue Code of 1986 to limit the deductibility 

of excessive rates of executive compensation. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 18, 2009 

Ms. LEE of California (for herself, Ms. WOOLSEY, Mr. COHEN, and Mr. FILNER) 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 limit the 

deductibility of excessive rates of executive compensation. 

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 ‘‘Income Equity Act 

5 of 2009’’. 

6 SEC. 2. DENIAL OF DEDUCTION FOR PAYMENTS OF EXCES7 SIVE COMPENSATION. 

8 (a) IN GENERAL.—Section 162 of the Internal Rev9 enue Code of 1986 (relating to deduction for trade or busiVerDate Nov 24 2008 06:56 Mar 19, 2009 Jkt 079200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H1594.IH H1594

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1 ness expenses) is amended by inserting after subsection 

2 (h) the following new subsection: 

3 ‘‘(i) EXCESSIVE COMPENSATION.— 

4 ‘‘(1) IN GENERAL.—No deduction shall be al5 lowed under this chapter for any excessive com6 pensation with respect to any full-time employee. 

7 ‘‘(2) EXCESSIVE COMPENSATION.—For pur8 poses of this subsection, the term ‘excessive com9 pensation’ means, with respect to any employee, the 

10 amount by which— 

11 ‘‘(A) the compensation for services per12 formed by such employee during the taxable 

13 year, exceeds 

14 ‘‘(B) the greater of— 

15 ‘‘(i) an amount equal to 25 times the 

16 lowest compensation for services performed 

17 by any other full-time employee during 

18 such taxable year, or 

19 ‘‘(ii) $500,000. 

20 ‘‘(3) DEFINITIONS AND SPECIAL RULES.—For 

21 purposes of this subsection— 

22 ‘‘(A) COMPENSATION.— 

23 ‘‘(i) IN GENERAL.—The term ‘com24 pensation’ includes wages, salary, deferred 

25 compensation, retirement contributions, 


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1 options, bonuses, property, and any other 

2 form of compensation or bonus that the 

3 Secretary of the Treasury determines is 

4 appropriate. 

5 ‘‘(ii) PART-YEAR EMPLOYEES.—In the 

6 case of any part-year employee, the com7 pensation of the employee shall be com8 puted on an annualized basis. 

9 ‘‘(B) EMPLOYER.—All persons treated as a 

10 single employer under subsection (a) or (b) of 

11 section 52 or subsection (m) or (o) of section 

12 414 shall be treated as 1 employer. 

13 ‘‘(4) REPORTING.—Each employer who provides 

14 compensation in any taxable year to any employee in 

15 an amount which is more than 25 times the amount 

16 of the lowest-compensated full-time employee, shall 

17 file a report with the Secretary containing— 

18 ‘‘(A) the compensation of the lowest-com19 pensated full-time employee, 

20 ‘‘(B) the average pay of all non-managerial 

21 employees, 

22 ‘‘(C) the average pay of all executive staff, 

23 and 

24 ‘‘(D) the exact compensation of the top 5 

25 employees of the company. 


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1 Any such report shall be filed at such time and in 

2 such manner as the Secretary may require.’’. 

3 (b) EFFECTIVE DATE.—The amendment made by 

4 this section shall apply to taxable years beginning after 

5 the date of the enactment of this Act. 

Æ 


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