The top Democrat on the House Budget Committee on Thursday introduced legislation that would prevent companies from obtaining tax deductions for CEO bonuses unless certain employees’ salaries are raised.
“The bill establishes a standard for basic pay fairness. Big corporations shouldn't be getting tax breaks for CEO bonuses unless they also give their employees a raise,” said the bill’s author, Rep. Chris Van Hollen (D-Md.), in a statement.
Van Hollen’s office explains average pay must increase by average annual net productivity growth, incorporating inflation.
Companies wouldn’t be forced to give their employees raises if the bill were enacted. But if they don’t, they wouldn’t be able to claim a tax deduction for highly paid employees exceeding $1 million.
Under the current tax code, companies are allowed to deduct unlimited amounts of performance-based pay for executives, Van Hollen’s office said.
The measure, which would not apply to small businesses, is part of the Middle Class Jumpstart Agenda, an economic agenda House Democrats unveiled in July.