H.R. 5019 — CEO Accountability and Responsibility Act

This section establishes a tiered increase to the corporate income tax rate—currently a flat 21%—for publicly traded corporations based on their compensation ratio (i.e., the ratio of the chief executive officer's or highest-paid employee's total compensation, as reported to the SEC, to the median wages of all U.S. employees for the prior calendar year), as follows: +0.5 percentage points if over 100:1 but not over 150:1; +1 point if over 150:1 but not over 200:1; +1.5 points if over 200:1 but not over 250:1; +2 points if over 250:1 but not over 300:1; +2.5 points if over 300:1 but not over 400:1; and +3 points if over 400:1. (Thus, the maximum rate rises to 24%.) It further increases the applicable adjustment by 50% (e.g., +4.5 points) if U.S. full-time employees decline by more than 10% from the prior year while contracted or foreign full-time employees increase; treats controlled groups as a single employer; requires reports to the IRS; and authorizes IRS regulations. The changes apply to taxable years beginning after enactment.

This section establishes a preference in executive agency evaluations of bids or proposals for procurement contracts for goods or services to entities with a compensation ratio of less than 50-to-1 for the previous calendar year. The compensation ratio has the meaning given in section 11(e)(3)(A) of the Internal Revenue Code of 1986 (i.e., the ratio of the principal executive officer's annual compensation to the median annual compensation of all employees).