I 

117TH CONGRESS 

1ST SESSION H. R. 3301 

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 corporation’s highest paid employee to the median compensation 

of all the corporation’s employees, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 18, 2021 

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 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 corporation’s 

highest paid employee to the median compensation of 

all the corporation’s employees, 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 ‘‘CEO Accountability 

5 and Responsibility Act’’. 


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1 SEC. 2. INCOME TAX RATE OF PUBLICLY TRADED COR2 PORATIONS BASED ON COMPENSATION 

3 RATIO. 

4 (a) IN GENERAL.—Section 11 of the Internal Rev5 enue Code of 1986 is amended by adding at the end the 

6 following: 

7 ‘‘(e) TAX RATE OF PUBLICLY TRADED CORPORA8 TIONS BASED ON COMPENSATION RATIO.— 

9 ‘‘(1) IN GENERAL.—In the case of a publicly 

10 traded corporation (as defined in section 

11 162(m)(2)), in the amount of tax under subsection 

12 (b) shall be determined— 

13 ‘‘(A) by adjusting the highest rate of tax 

14 applicable to the taxpayer by the percentage 

15 point adjustment specified in paragraph (2), 

16 and 

17 ‘‘(B) by making proper adjustments to— 

18 ‘‘(i) the dollar amount in clause (ii) of 

19 the second sentence of paragraph (1), and 

20 ‘‘(ii) the dollar amount in clause (ii) 

21 of the third sentence of paragraph (1). 

22 ‘‘(2) ADJUSTMENT OF TAX RATE.—For pur23 poses of paragraph (1), the percentage points speci24 fied in this paragraph shall be determined as follows: 


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‘‘If the compensation ratio is: The percentage point 

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. 

1 ‘‘(3) DEFINITIONS.—For purposes of this sub2 section— 

3 ‘‘(A) COMPENSATION RATIO.—The term 

4 ‘compensation ratio’ means, with respect to any 

5 taxable year, a ratio— 

6 ‘‘(i) the numerator of which is the 

7 amount equal to the greater of the com8 pensation of the chief executive officer or 

9 the highest paid employee of the taxpayer 

10 for the calendar year preceding the begin11 ning of the taxable year, and 

12 ‘‘(ii) the denominator of which is the 

13 amount equal to the median compensation 

14 of all employees employed by the taxpayer 

15 in the United States for the calendar year 

16 preceding the beginning of the taxable 

17 year. 

18 ‘‘(B) COMPENSATION.— 

19 ‘‘(i) EMPLOYEES.—In the case of em20 ployees of the taxpayer other than the 


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1 chief executive officer or the highest paid 

2 employee, the term ‘compensation’ means 

3 wages (as defined in section 3121(a)) paid 

4 by the taxpayer during a calendar year. 

5 ‘‘(ii) CEO AND HIGHEST PAID EM6 PLOYEE.—In the case of the chief execu7 tive officer and the highest paid employee 

8 of the taxpayer, the term ‘compensation’ 

9 means total compensation for the calendar 

10 year, as reported in the Summary Com11 pensation Table reported to the Securities 

12 and Exchange Commission pursuant to 

13 Item 402 of Regulation S–K of the Securi14 ties and Exchange Commission. 

15 ‘‘(4) SPECIAL RULE IF CONTRACTED OR FOR16 EIGN EMPLOYEE RATIO INCREASES.— 

17 ‘‘(A) IN GENERAL.—If— 

18 ‘‘(i) the total number of full-time em19 ployees, determined on an annual full-time 

20 equivalent basis, employed by the taxpayer 

21 in the United States for a taxable year is 

22 reduced by more than 10 percent, as com23 pared to the total number of full-time em24 ployees, determined on an annual full-time 

25 equivalent basis, employed by the taxpayer 


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1 in the United States for the preceding tax2 able year, and 

3 ‘‘(ii) the total number of contracted 

4 employees or foreign full-time employees, 

5 determined on an annual full-time equiva6 lent basis, of the taxpayer for that taxable 

7 year has increased, as compared with the 

8 total number of contracted employees or 

9 foreign full-time employees, determined on 

10 an annual full-time equivalent basis, of the 

11 taxpayer for the preceding taxable year, 

12 then the applicable tax rate determined under 

13 paragraph (2) shall be increased by 50 percent. 

14 For taxpayers who first commence doing busi15 ness during the taxable year, the number of 

16 full-time employees, contracted employees, and 

17 foreign full-time employees for the immediately 

18 preceding prior taxable year shall be zero. 

19 ‘‘(B) DEFINITIONS.—For purposes of this 

20 paragraph— 

21 ‘‘(i) ANNUAL FULL-TIME EQUIVA22 LENT.—The term ‘annual full-time equiva23 lent’ means— 

24 ‘‘(I) in the case of a full-time em25 ployee paid hourly qualified wages, the 


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1 total number of hours worked for the 

2 taxpayer by the employee, not to ex3 ceed 2,000 hours per employee, di4 vided by 2,000, and 

5 ‘‘(II) in the case of a salaried 

6 full-time employee, the total number 

7 of weeks worked for the taxpayer by 

8 the employee divided by 52. 

9 ‘‘(ii) CONTRACTED FULL-TIME EM10 PLOYEE.—The term ‘contracted full-time 

11 employee’ means an individual engaged by 

12 the taxpayer to provide a specific set of 

13 services established pursuant to the terms 

14 and conditions of a written employment 

15 contract that delineates the length of em16 ployment, the salary and bonuses (if any) 

17 to be paid, and the benefits that accrue to 

18 that individual. 

19 ‘‘(iii) FOREIGN FULL-TIME EM20 PLOYEE.—The term ‘foreign full-time em21 ployee’ means a full-time employee of the 

22 taxpayer that is employed at a location 

23 other than the United States. 


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1 ‘‘(iv) FULL-TIME EMPLOYEE.—The 

2 term ‘full-time employee’ means an em3 ployee of the taxpayer that either— 

4 ‘‘(I) is paid compensation by the 

5 taxpayer for services of not less than 

6 an average of 35 hours per week, or 

7 ‘‘(II) is a salaried employee of 

8 the taxpayer and is paid compensation 

9 during the taxable year for full-time 

10 employment. 

11 ‘‘(5) CONTROLLED GROUPS.—For purposes of 

12 this subsection, all persons treated as a single em13 ployer under subsection (b), (c), (m) or (o) of sec14 tion 414 shall be treated as one person. 

15 ‘‘(6) REPORTS.—The taxpayer shall furnish 

16 such reports to the Secretary with respect to com17 pensation and such other matters as the Secretary 

18 may require. The reports required by this subsection 

19 shall be filed at such time and in such manner as 

20 may be required by the Secretary. 

21 ‘‘(7) REGULATIONS.—The Secretary shall pre22 scribe such regulations and other guidance as may 

23 be necessary or appropriate to carry out this sub24 section, including any guidelines regarding the deterVerDate Sep 11 2014 04:21 Jun 16, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H3301.IH H3301

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1 mination of wages, average compensation, and com2 pensation ratio.’’. 

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

4 subsection (a) shall apply to taxable years beginning after 

5 the date of the enactment of this Act. 

6 SEC. 3. CONTRACTING PREFERENCE FOR ENTITIES WITH 

7 CERTAIN PAY RATIOS. 

8 (a) AMENDMENT.—Chapter 47 of title 41, United 

9 States Code, is amended by inserting after section 4714 

10 the following new section: 

11 ‘‘§ 4715. Preference for entities with certain pay ra12 tios 

13 ‘‘(a) PREFERENCE.—In the evaluation of bids or pro14 posals for a contract for the procurement of goods or serv15 ices, the head of an executive agency shall provide a pref16 erence to an entity that for the previous calendar year has 

17 a compensation ratio of less than 50-to-1. 

18 ‘‘(b) COMPENSATION RATIO DEFINED.—In this sec19 tion, the term ‘compensation ratio’ has the meaning given 

20 that term in section 11(e)(3)(A) of the Internal Revenue 

21 Code of 1986, except the ratio determined for the calendar 

22 year preceding the calendar year of the contract to which 

23 this section applies.’’. 

24 (b) CLERICAL AMENDMENT.—The table of sections 

25 at the beginning of such chapter is amended by inserting 


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1 after the item relating to section 4714 the following new 

2 item: 

‘‘4715. Preference for entities with certain pay ratios.’’. 

Æ 


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