H.R.3140 - Stop Subsidizing Multimillion Dollar Corporate Bonuses Act (119th Congress)
Summary
H.R.3140, the "Stop Subsidizing Multimillion Dollar Corporate Bonuses Act," aims to amend the Internal Revenue Code of 1986 to expand the denial of tax deductions for excessive employee remuneration. The bill targets to modify the definition of 'covered individual' and 'publicly held corporation' for the purpose of limiting tax deductions on executive compensation.
The proposed changes include striking the term 'employee' and inserting 'individual' in relevant sections of the code. It also grants the Secretary regulatory authority to prevent avoidance of the law through pass-through entities or other means.
The bill's effective date is for taxable years beginning after December 31, 2024.
Expected Effects
If enacted, H.R.3140 would likely reduce the tax benefits corporations receive for high executive compensation. This could lead to changes in how companies structure executive pay packages.
Companies might reduce the size of bonuses or shift compensation to different forms not covered by the deduction limits. It could also increase government revenue by reducing corporate tax deductions.
Potential Benefits
- Could lead to a fairer tax system by reducing subsidies for high executive pay.
- May incentivize companies to invest more in other areas, such as employee wages or research and development.
- Could generate additional tax revenue for the government, which could be used to fund public services or reduce the national debt.
- Potentially reduces the incentive for excessive risk-taking by executives seeking large bonuses.
- May promote greater transparency in executive compensation practices.
Most Benefited Areas:
Potential Disadvantages
- Could lead to companies finding ways to circumvent the law, such as shifting compensation to non-cash forms.
- May make it more difficult for companies to attract and retain top executive talent.
- Could increase the complexity of tax law and create compliance challenges for businesses.
- The impact on government revenue may be less than anticipated if companies adjust their compensation strategies.
- Potential for unintended consequences on overall economic activity.
Most Disadvantaged Areas:
Constitutional Alignment
The bill aligns with the constitutional power of Congress to levy taxes, as outlined in Article I, Section 8, Clause 1. It falls under the necessary and proper clause (Article I, Section 8, Clause 18) as it relates to implementing tax laws.
The Sixteenth Amendment grants Congress the power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration. H.R. 3140 is an exercise of this power.
There are no apparent constitutional conflicts related to individual liberties or rights.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).