Rep. Doggett’s Bill to End Special Tax Exemptions for Huge Executive Bonuses
Contact: Alexis.Torres@mail.house.gov
Washington, DC – Today, U.S. Representative Lloyd Doggett (D-Texas) introduced the Stop Subsidizing Multimillion Dollar Corporate Bonuses Act to close a major loophole in current corporate tax law that uses taxpayer dollars to fund lavish pay packages. The bill would specifically end special tax breaks for publicly traded companies that deduct the cost of any multimillion-dollar bonus paid to executives. Senator Jack Reed (D-RI) is filing companion legislation in the Senate.
“The 2017 Trump-GOP Tax Scam left a perverse incentive for companies: the more you pay your executives, the less you’ll pay in taxes,” said Rep. Doggett. “By closing this loophole, we can hold corporate giants accountable. While they can pay their executives whatever they choose, American taxpayers shouldn’t be asked to shoulder the cost. Working families need a living wage, not to have their hard-earned money further enrich Wall Street millionaires.”
Under existing tax law, Section 162(m) prohibits publicly traded corporations from deducting more than $1 million in compensation paid to a small subset of their top executives: the CEO, the CFO, and the three highest non-CEO and non-CFO officers. Both Republican and Democratic administrations have signed laws based on earlier versions of this legislation to help curtail the abuse of this deduction. However, the full loophole is still not closed, and taxpayers continue to subsidize billions of dollars in extravagant compensation.
To address the widening income gap and help resolve corporate tax avoidance on exorbitant executive pay, this legislation increases the number of wealthy executives subject to section 162(m) from the top five to any employee compensated over $1 million. As of 2023, the CEO-to-worker pay ratio was 268-to-1, meaning it would take more than five career lifetimes for the average worker to match a CEO’s earnings in a single year. According to reports, Congressional Republicans have expressed interest in new restrictions on such tax breaks for publicly traded companies.
The Stop Subsidizing Multimillion Dollar Corporate Bonuses Act is cosponsored by Representatives Greg Casar (TX-35), Judy Chu (CA-28), Steve Cohen (TN-09); Rosa DeLauro (CT-03), Christopher DeLuzio (PA-17), Adriano Espaillat (NY-13), John Garamendi (CA-08), Jesús "Chuy" García (IL-04), Henry "Hank" Johnson (GA-04), Summer Lee (PA-12), Seth Magaziner (RI-02), Gwen Moore (WI-04), Eleanor Holmes Norton (D-DC), Jamie Raskin (MD-08), Andrea Salinas (OR-06), Jan Schakowsky (IL-09), Melanie Stansbury (NM-01), Mark Takano (CA-39), Rashida Tlaib (MI-12), Jill Tokuda (HI-02), and Bonnie Watson Coleman (NJ-12).
The bill is also supported by AFL-CIO, Public Citizen, Americans for Financial Reform, Take on Wall Street, Americans for Tax Fairness, MIT Professor and Nobel Prize recipient Simon Johnson, and the Institute for Policy Studies, Global Economy Project.