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The Tax Excessive CEO Pay Act

The bill, which Sanders introduced in the Senate on Jan. 18, would hit corporate giants with a tax rate increase of 0.5% to 5%, depending on the severity of their pay disparity.

Companies that pay their top executives between 50 and 100 times more than what a typical worker makes would face a 0.5% tax increase, while those whose CEO pay ratio is more than 500 to 1 would face the maximum penalty of 5%.

According to the press release, a CEO at the largest 350 U.S. publicly-owned firms makes close to 344 times the average pay of a typical worker, and if current pay patterns continue, the rates would generate $150 billion in revenue for the government over 10 years.

The proposed law would include measures to stop companies from dodging the tax penalties by using contractors rather than employees, and it would require private companies to make their CEO-to-worker pay data public.

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Does this bill stand a chance?

This is a tough time to take on corporate America.

With U.S. elections fast approaching, lawmakers are treading carefully on how they tackle the nation’s deep economic challenges. The presidential candidates, in particular, will be wary of provoking big businesses, who have a lot of political influence.

To clear the Senate — which Democrats narrowly control at 51-49 — Sanders’ bill would need 60 votes. It would then have to get through the Republican-controlled House of Representatives, where its chances of success are slim.


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About the Author

Bethan Moorcraft

Bethan Moorcraft


Bethan Moorcraft is a reporter for Moneywise with experience in news editing and business reporting across international markets.

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