# What This Bill Actually Does

Right now, large corporations can deduct executive bonuses from their taxes as a business expense, which effectively means taxpayers are subsidizing those bonuses through lost tax revenue. This bill closes that loophole by preventing companies from writing off excessive compensation paid to their top executives and other highly paid workers.

Currently, there's already a rule that limits how much companies can deduct for executive pay, but it only applies to a narrow group—basically the CEO and CFO of publicly traded companies. This bill significantly expands that rule. Starting in 2023, it would apply to any worker at a publicly traded company, not just the top two executives. It also includes the three highest-paid officers at these companies, plus anyone else earning extremely high compensation. The key change is that companies can no longer deduct compensation above a certain level for these workers, meaning if a company pays a CEO a $50 million bonus, they can't reduce their taxable income by that full amount.

The bill also expands the definition of which companies are affected. Instead of only applying to companies currently filing public reports, it would apply to any company that was required to file such reports at any point during the previous three years. This prevents companies from dodging the rule by temporarily going private.

The practical effect is straightforward: companies will have less incentive to pay massive bonuses to executives since they can't deduct those payments from their taxes. This means either executive compensation will be more restrained, or companies will pay more in taxes. Either way, the government collects more revenue, and taxpayers stop indirectly subsidizing multimillion-dollar bonuses through the tax code.

Stop Subsidizing Multimillion Dollar Corporate Bonuses Act

Doggett, Lloyd

Stop Subsidizing Multimillion Dollar Corporate Bonuses Act This bill extends the $1 million limit on the deductibility of executive compensation to all employees of publicly traded corporations.