Congressman Chris Van Hollen

Representing the 8th District of Maryland

Van Hollen Introduces the CEO-Employee Pay Fairness Act as Part of the Middle Class Jumpstart Agenda

No Raise for Workers, No Tax Break for CEO Bonuses
Sep 18, 2014

Today Maryland Congressman Chris Van Hollen, Ranking Member of the House Budget Committee, announced he will introduce the CEO-Employee Pay Fairness Act.  Executive compensation has skyrocketed while wages for regular workers have stagnated – even as our economy continues to recover.  This legislation, which is part of the House Democrats’ Middle Class Jumpstart Agenda, will incentivize companies to give their rank-and-file employees annual raises that, on average, at least keep pace with increases in living costs and labor productivity.  If a company fails to boost the pay of its workers, the legislation would prevent it from claiming tax deductions for CEO bonuses and other “performance-based” compensation exceeding $1 million.  According the Economic Policy Institute, corporations wrote off an estimated $66 billion in “performance” pay for CEOs and other top executives between 2007 and 2010.

“Workers are more productive than ever and corporations are more profitable than ever, yet wages are barely keeping up with the cost of living. And what’s worse, our tax code subsidizes excessive CEO pay,” said Congressman Van Hollen. “The bill establishes a standard for basic pay fairness. Big corporations shouldn’t be getting tax breaks for CEO bonuses unless they also give their employees a raise. Instead, Democrats will keep fighting for hardworking middle class families who deserve good-paying jobs, an affordable education, and equal pay for equal work.”

Under the CEO-Employee Pay Fairness Act, public companies must meet a pay fairness requirement to be eligible to deduct CEO bonuses and other compensation exceeding $1 million. To meet that requirement, a corporation must raise the average pay of employees earning under $115,000 by enough to reflect increases in the cost of living and labor productivity. The bill would be a step forward toward ensuring that workers share in the gains from their own labor. 

To read a fact sheet on the bill, click here.