II 

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. 

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 ‘‘Curtailing Executive 

5 Overcompensation (CEO) Act’’. 

2 

•S 3176 IS

1 SEC. 2. EXCISE TAX ON EXCESSIVE CHIEF EXECUTIVE OFFI2 CER PAY DISPARITY. 

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

5 following new chapter: 

6 ‘‘CHAPTER 50B—PAY DISPARITY 

‘‘Sec. 5000E. Excessive pay disparity. 

7 ‘‘SEC. 5000E. EXCESSIVE PAY DISPARITY. 

8 ‘‘(a) IN GENERAL.—In the case of any employer 

9 which is an applicable employer for the calendar year, 

10 there is hereby imposed a tax equal to the lesser of— 

11 ‘‘(1) 1 percent of the product of— 

12 ‘‘(A) the pay disparity factor of the appli13 cable employer for the calendar year, and 

14 ‘‘(B) the excess of— 

15 ‘‘(i) amount determined under sub16 section (c)(2)(A) for such calendar year, 

17 over 

18 ‘‘(ii) 5,000 percent of the amount de19 termined under subsection (c)(2)(B) for 

20 such calendar year, or 

21 ‘‘(2) 1 percent of the gross receipts (within the 

22 meaning of section 448(c)) of such applicable em23 ployer. 

24 ‘‘(b) APPLICABLE EMPLOYER.— 

3 

•S 3176 IS

1 ‘‘(1) IN GENERAL.—For purposes of this sec2 tion, the term ‘applicable employer’ means, with re3 spect to any calendar year, any employer which— 

4 ‘‘(A) has not less than $100,000,000 in 

5 gross receipts (within the meaning of section 

6 448(c)) for each of the 3 calendar years pre7 ceding such calendar year, and 

8 ‘‘(B) has paid wages in excess of 

9 $10,000,000 for each calendar year in the 3- 

10 calendar-year period taken into account under 

11 subparagraph (A). 

12 ‘‘(2) AGGREGATION RULE.—For purposes of 

13 this section, the rules of subsection (a) and (b) of 

14 section 52 shall apply. 

15 ‘‘(3) PREDECESSORS.—For purposes of para16 graph (1)(A), rules similar to the rules of section 

17 448(c)(3)(D) shall apply. 

18 ‘‘(4) INFLATION ADJUSTMENT.— 

19 ‘‘(A) IN GENERAL.—In the case of any cal20 endar year after 2024, the $100,000,000 

21 amount under paragraph (1)(A) and the 

22 $10,000,000 amount under paragraph (1)(B) 

23 shall each be increased by an amount equal 

24 to— 

25 ‘‘(i) such dollar amount, multiplied by 

4 

•S 3176 IS

1 ‘‘(ii) the cost-of-living adjustment de2 termined under section 1(f)(3) for such 

3 calendar year, determined by substituting 

4 ‘calendar year 2023’ for ‘calendar year 

5 2016’ in subparagraph (A)(ii) thereof. 

6 ‘‘(B) ROUNDING.—The amount of any in7 crease under clause (i) shall be rounded to the 

8 nearest multiple of $100,000. 

9 ‘‘(c) PAY DISPARITY FACTOR.—For purposes of this 

10 section— 

11 ‘‘(1) IN GENERAL.—The term ‘pay disparity 

12 factor’ means, with respect to any applicable em13 ployer for calendar year, the excess (if any) of— 

14 ‘‘(A) the pay disparity ratio of such em15 ployer for such calendar year, over 

16 ‘‘(B) 50. 

17 ‘‘(2) PAY DISPARITY RATIO.—The term ‘pay 

18 disparity ratio’ means, with respect to any applicable 

19 employer for calendar year, the ratio of— 

20 ‘‘(A) the average qualified wages for the 5- 

21 calendar year period ending with such calendar 

22 year of the individual who is the highest com23 pensated employee of the applicable employer 

24 for such calendar year, to 

5 

•S 3176 IS

1 ‘‘(B) the median wages paid to all applica2 ble employees of the applicable employer for 

3 such calendar year. 

4 ‘‘(3) WAGES; QUALIFIED WAGES.— 

5 ‘‘(A) WAGES.—The term ‘wages’ has the 

6 meaning given such term under section 

7 3401(a), determined without regard to para8 graph (8) thereof. 

9 ‘‘(B) QUALIFIED WAGES.— 

10 ‘‘(i) IN GENERAL.—The term ‘quali11 fied wages’ means wages increased by— 

12 ‘‘(I) any elective deferrals (within 

13 the meaning of section 402(g)(3)) not 

14 included in wages, and 

15 ‘‘(II) any amounts described in 

16 section 415(c)(3)(D)(ii) which are not 

17 included in wages. 

18 ‘‘(ii) SELF-EMPLOYED INDIVIDUALS

19 AND OWNER-EMPLOYEES.—In the case of 

20 an employee (within the meaning of section 

21 401(c)(1)), the term ‘qualified wages’ in22 cludes the earned income (as defined in 

23 section 401(c)(2) of such employee, but de24 termined without regard to any exclusion 

25 under section 911) of such employee. 

6 

•S 3176 IS

1 ‘‘(4) APPLICABLE EMPLOYEE.—For purposes of 

2 this subsection— 

3 ‘‘(A) IN GENERAL.—The term ‘applicable 

4 employee’ means any individual whose wages in 

5 connection with services performed for the ap6 plicable employer for the calendar year are 

7 equal to or more than $5,000. 

8 ‘‘(B) INFLATION ADJUSTMENT.— 

9 ‘‘(i) IN GENERAL.—In the case of any 

10 calendar year after 2024, the $5,000 

11 amount under subparagraph (A)(ii) shall 

12 be increased by an amount equal to— 

13 ‘‘(I) such dollar amount, multi14 plied by 

15 ‘‘(II) the cost-of-living adjust16 ment determined under section 1(f)(3) 

17 for such calendar year, determined by 

18 substituting ‘calendar year 2023’ for 

19 ‘calendar year 2016’ in subparagraph 

20 (A)(ii) thereof. 

21 ‘‘(ii) ROUNDING.—The amount of any 

22 increase under clause (i) shall be rounded 

23 to the nearest multiple of $100. 

24 ‘‘(d) JOINT AND SEVERAL LIABILITY.—If more than 

25 one taxpayer is treated as a single employer under this 

7 

•S 3176 IS

1 section by reason of subsection (b)(2), then each such tax2 payer shall be jointly and severally liable for the tax im3 posed by subsection (a). 

4 ‘‘(e) REGULATIONS.—The Secretary shall issue regu5 lations as necessary to prevent avoidance of the purposes 

6 of this section, including regulations to prevent the manip7 ulation of the pay disparity factor by changes to the com8 position of the workforce (including by using the services 

9 of contractors rather than employees).’’. 

10 (b) NO DEDUCTION FROM INCOME TAXES.—Section 

11 275(a)(6) of the Internal Revenue Code of is amended by 

12 inserting ‘‘50B,’’ after ‘‘50A,’’. 

13 (c) CLERICAL AMENDMENT.—The table of chapters 

14 for subtitle D of the Internal Revenue Code of 1986 is 

15 amended by adding at the end the following new item: 

‘‘CHAPTER 50B—PAY DISPARITY’’. 

16 (d) EFFECTIVE DATE.—The amendments made by 

17 this section shall apply to taxable years beginning after 

18 the date of the enactment of this Act. 

Æ