Democrats in the House and Senate have proposed new legislation aimed at ensuring that companies pay taxes on “excessive” employee pay.
The bill, from Rep. Lloyd Doggett, D-Texas, and Sen. Jack Reed, D-R.I., is meant to stop senior employees from getting huge bonuses that their companies can deduct from their corporate tax bill each year.
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Under current law, companies can deduct employee salaries from their taxable income as long as those salaries don’t exceed $1 million per year. Democrats say companies are getting around that limit by paying out millions in bonuses that they also get to deduct from their tax bill.
Doggett said the bill would require companies to pay taxes on those millions in bonus awards.
“Our tax code has a perverse incentive for companies: the more you pay your executives, the less you’ll pay in taxes,” Doggett said. “It is wrong to compel working families and small businesses to foot part of the bill for lavish executive bonuses.”
Reed said the bill would still let companies pay employees as much as they want, but it would force them to pay taxes on all compensation above $1 million per year per employee.
“The American taxpayer shouldn’t help foot the bill for a CEO’s multimillion-dollar bonus,” Reed said.
