What's happening
This bill imposes an additional tax on companies with high CEO-to-median worker pay ratios, based on SEC pay ratio disclosures.
Why it matters
Targets companies with significant pay gaps. The bill specifically imposes additional taxes on companies where the CEO earns at least 100 times more than the median worker, directly addressing concerns about extreme income inequality within corporations.
Uses existing SEC disclosures for enforcement. By relying on pay ratio data that public companies already report to the SEC, the bill leverages existing transparency requirements, making enforcement and compliance more straightforward and reducing administrative burden.
Creates stronger financial incentives for pay equity. The tax penalty increases sharply (from 10% to 25% of base tax liability) for companies with the most extreme pay ratios (250:1 or higher), potentially encouraging companies to reconsider executive compensation structures or raise median worker pay to avoid higher taxes.
Applies broadly to any company under SEC pay ratio rules. The measure affects all companies required to disclose pay ratios under federal law, meaning its impact could be widespread among large public corporations operating in New York.
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Who cares
Companies subject to SEC pay-ratio reporting
They would face an annual tax of 10% of base tax liability for reported pay ratios of at least 100-to-1 but below 250-to-1, or 25% for ratios of 250-to-1 or higher.
Corporate tax and compensation teams
Reported pay ratios would determine whether their companies owe the additional tax and which rate applies.
New York State tax administrators
They would administer a new annual tax tied to SEC pay-ratio disclosures for tax years beginning on or after January 1, 2020.
Headline styles
Tax High Executive Pay Ratios
Plain English, a few words. Used as the page title.
Sponsors
Senator · Senate District 39
History
- Referred to investigations and government operations
- Reported and committed to finance
- Referred to investigations and government operations
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Tax High CEO Pay Gaps
In Assembly Committee · Ways And Means · Sponsor Ron Kim
Full text
1 pageUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
1659
2019-2020 Regular Sessions
IN SENATE
January 15, 2019
Introduced by Sen. SKOUFIS -- read twice and ordered printed, and when printed to be committed to the Committee on Investigations and Government Operations
AN ACT to amend the tax law, in relation to imposing a tax related to executive compensation
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. The tax law is amended by adding a new section 183-b to read as follows:
§ 183-b. Tax on companies subject to United States securities and exchange commission pay ratio reporting requirements. Notwithstanding any other provision of this chapter, or of any other law, for the period beginning with the taxable years commencing on or after the first day of January, two thousand twenty, an annual tax is hereby imposed upon every company subject to the United States securities and exchange commission pay ratio reporting requirements, pursuant to section 229.402 of title 17 of the code of federal regulations, at the rate of ten percent of base tax liability if such company reports to the United States securities and exchange commission a pay ratio of at least one hundred to one but less than two hundred fifty to one on United States securities and exchange commission disclosures; or at the rate of twenty-five percent of base tax liability if such company reports to the United States securities and exchange commission a pay ratio of two hundred fifty to one or greater on United States securities and exchange commission disclosures.
§ 2. This act shall take effect January 1, 2020 and shall apply to all tax years commencing on or after such date.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD04324-01-9
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the tax law, in relation to imposing a tax related to executive compensation
Purpose or general idea of bill
Establishes a 10% tax on companies where CEOs make more than one hundred times the company's median pay and a 25% tax on companies where CEOs make more than two hundred fifty times the company's median pay.
Summary of provisions
Creates a tax on companies subject to United States Securities and Exchange Commission pay ratio reporting requirements section 229.402 of title 17 of the code of federal regulations, at the rate of 10% if the company reports that the CEO makes one hundred times the median pay of all their workers, and at the rate of 25% if the company reports that the CEO makes two hundred fifty times the median pay of all their work- ers.
Justification
Our state and nation have never seen income inequality at levels that exist today. Executive pay continues to climb to historic highs while many workers have not seen a raise in years or decades despite the fact that CEO and executive compensation is only possible with the hard work of all the company's employees. This bill seeks to ensure all workers are treated with respect and dignity - and that not all profits exclu- sively go to the very top of the corporate structure.
Prior legislative history
Assembly: 03/01/17 - Referred to Ways and Means 01/03/18 - Referred to Ways and Means 03/20/18 - Amend and recommit to Ways and Means 03/20/18 - Print number 6236A
Fiscal implications
None
Effective date
This act shall take effect January 1, 2020 and shall apply to all tax years commencing on or after such date.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.