Bill would strip executive pay deductions from companies without profit-sharing

What does this do?

HR 6418 would eliminate the tax deduction companies currently take for executive compensation unless they operate a qualifying profit-sharing program for regular employees. To qualify, a plan must distribute at least 5 percent of the company's net income to workers, include part-time employees who have been there at least one year, and spread payments fairly across the workforce. The bill applies to companies above a certain revenue threshold and does not legally require profit-sharing or cap executive pay.

Who does it affect?

The bill primarily affects larger employers and their highest-paid executives. Rank-and-file employees at those companies, including part-time workers with at least one year of tenure, are also directly affected.

Why does it matter?

Companies without a qualifying profit-sharing plan would face a choice between establishing one or forgoing the tax deduction for executive compensation. The IRS would gain authority to intervene if a company offsets profit-sharing costs by reducing workers' regular wages or benefits.

Where does it stand?