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Bill to tax corporations with extreme CEO‑to‑worker pay ratios receives passionate debate, laid over
Summary
Representative Smith’s bill to impose a graduated surtax on corporations whose CEO pay greatly exceeds median worker pay drew strong support from labor and unions and strong opposition from business groups; the bill was laid over for possible inclusion in the 2026 tax package.
Representative Smith framed House File 1041 as a targeted surtax on corporations with very high CEO-to-median-worker pay ratios and said revenues would fund public investments. The sponsor described widening executive pay disparities, invoked research on rising CEO pay and gave examples of specific companies and pay ratios while arguing heavily subsidized corporate profits and low relative worker pay justify the policy.
Proponents included labor researchers and federation representatives, who said the surtax would raise meaningful revenue (a witness estimated roughly $212 million) and would disqualify companies with extreme pay ratios from certain state grants. Testimony from union members emphasized the everyday impact of pay disparity on workers.
Business groups, including the Minnesota Business Partnership and the Minnesota Chamber of Commerce, opposed the bill. Their witnesses said the proposed tax uses federal pay-ratio reporting in a way that could penalize firms because the federal metric does not isolate Minnesota payrolls and argued the surtax would make Minnesota less competitive and could discourage investment and job creation.
Representative Smith closed by rebutting competitiveness arguments and stressing that companies could alter the underlying ratio by raising median pay or lowering CEO pay. After discussion and multiple public witnesses, the committee laid House File 1041 over for possible inclusion in the 2026 tax bill.
