S. 5011

119 S5011 IS: Curtailing Executive Overcompensation (CEO) Act
 U.S. Senate
 2026-07-16
 text/xml
 EN
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 II  119th CONGRESS  2d Session  S. 5011  IN THE SENATE OF THE UNITED STATES   July 16, 2026   Mr. Whitehouse  (for himself,  Ms. Baldwin ,  Ms. Warren ,  Mr. Merkley ,  Mr. Van Hollen , and  Mr. Welch ) 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.
Short title
This Act may be cited as the   Curtailing Executive Overcompensation (CEO) Act  .
2.
Excise tax on excessive chief executive officer pay disparity
(a)
In general
Subtitle D of the Internal Revenue Code of 1986 is amended by adding at the end the following new chapter:
50B
Pay disparity
Sec. 5000E. Excessive pay disparity.
5000E.
Excessive pay disparity
(a)
In general
In the case of any employer which is an applicable employer for the calendar year, there is hereby imposed a tax equal to the lesser of—
(1)
1 percent of the product of—
(A)
the pay disparity factor of the applicable employer for the calendar year, and
(B)
the excess of—
(i)
amount determined under subsection (c)(2)(A) for such calendar year, over
(ii)
5,000 percent of the amount determined under subsection (c)(2)(B) for such calendar year, or
(2)
1 percent of the gross receipts (within the meaning of section 448(c)) of such applicable employer.
(b)
Applicable employer
(1)
In general
For purposes of this section, the term  applicable employer  means, with respect to any calendar year, any employer which—
(A)
has not less than $100,000,000 in gross receipts (within the meaning of section 448(c)) for each of the 3 calendar years preceding such calendar year, and
(B)
has paid wages in excess of $10,000,000 for each calendar year in the 3-calendar-year period taken into account under subparagraph (A).
(2)
Aggregation rule
For purposes of this section, the rules of subsection (a) and (b) of section 52 shall apply.
(3)
Predecessors
For purposes of paragraph (1)(A), rules similar to the rules of section 448(c)(3)(D) shall apply.
(4)
Inflation adjustment
(A)
In general
In the case of any calendar year after 2027, the $100,000,000 amount under paragraph (1)(A) and the $10,000,000 amount under paragraph (1)(B) shall each be increased by an amount equal to—
(i)
such dollar amount, multiplied by
(ii)
the cost-of-living adjustment determined under section 1(f)(3) for such calendar year, determined by substituting  calendar year 2026  for  calendar year 2016  in subparagraph (A)(ii) thereof.
(B)
Rounding
The amount of any increase under clause (i) shall be rounded to the nearest multiple of $100,000.
(c)
Pay disparity factor
For purposes of this section—
(1)
In general
The term  pay disparity factor  means, with respect to any applicable employer for calendar year, the excess (if any) of—
(A)
the pay disparity ratio of such employer for such calendar year, over
(B)
50.
(2)
Pay disparity ratio
The term  pay disparity ratio  means, with respect to any applicable employer for calendar year, the ratio of—
(A)
the average qualified wages for the 5-calendar year period ending with such calendar year of the individual who is the highest compensated employee of the applicable employer for such calendar year, to
(B)
the median wages paid to all applicable employees of the applicable employer for such calendar year.
(3)
Wages; qualified wages
(A)
Wages
The term  wages  has the meaning given such term under section 3401(a), determined without regard to paragraph (8) thereof.
(B)
Qualified wages
(i)
In general
The term  qualified wages  means wages increased by—
(I)
any elective deferrals (within the meaning of section 402(g)(3)) not included in wages, and
(II)
any amounts described in section 415(c)(3)(D)(ii) which are not included in wages.
(ii)
Self-employed individuals and
  owner-employees
In the case of an employee (within the meaning of section 401(c)(1)), the term  qualified wages  includes the earned income (as defined in section 401(c)(2) of such employee, but determined without regard to any exclusion under section 911) of such employee.
(4)
Applicable employee
For purposes of this subsection—
(A)
In general
The term  applicable employee  means any individual whose wages in connection with services performed for the applicable employer for the calendar year are equal to or more than $5,000.
(B)
Inflation adjustment
(i)
In general
In the case of any calendar year after 2027, the $5,000 amount under subparagraph (A)(ii) shall be increased by an amount equal to—
(I)
such dollar amount, multiplied by
(II)
the cost-of-living adjustment determined under section 1(f)(3) for such calendar year, determined by substituting  calendar year 2026  for  calendar year 2016  in subparagraph (A)(ii) thereof.
(ii)
Rounding
The amount of any increase under clause (i) shall be rounded to the nearest multiple of $100.
(d)
Joint and several liability
If more than one taxpayer is treated as a single employer under this section by reason of subsection (b)(2), then each such taxpayer shall be jointly and severally liable for the tax imposed by subsection (a).
(e)
Regulations
The Secretary shall issue regulations as necessary to prevent avoidance of the purposes of this section, including regulations to prevent the manipulation of the pay disparity factor by changes to the composition of the workforce (including by using the services of contractors rather than employees).
   .
(b)
No deduction from income taxes
Section 275(a)(6) of the Internal Revenue Code of is amended by inserting  50B,  after  50A, .
(c)
Clerical amendment
The table of chapters for subtitle D of the Internal Revenue Code of 1986 is amended by adding at the end the following new item:
Chapter 50B—Pay disparity
  .
(d)
Effective date
The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.