Excessive executive comp.

AN ACT Relating to imposing a surcharge on publicly traded 1
companies providing excessive executive compensation; adding a new 2
section to chapter 82.04 RCW; adding a new section to chapter 82.16 3
RCW; creating new sections; and providing an effective date.4
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:5
NEW SECTION. Sec. 1. The legislature finds that chief executive 6
officers have seen massive pay raises while the wages of workers 7
remain modest. The pay for top executives is often hundreds, even 8
thousands, of times that of the median worker at their companies. One 9
report found that chief executive officer pay has increased 1,085 10
percent since 1978 while the median worker has seen a rise of only 24 11
percent in that same time frame. In the Pacific Northwest, the 12
average chief executive officer can make between 200 and 400 times 13
the amount of the chief executive officer's employees. This pay gap 14
contributes to income inequality in the United States and further 15
consolidates the wealth of the top one percent. It is the intent of 16
the legislature to impose a surcharge on corporations with excessive 17
chief executive officer pay and provide funding for state programs 18
that support all Washingtonians.19
H-1063.1
HOUSE BILL 1785
State of Washington 69th Legislature 2025 Regular Session
By Representatives Doglio, Berry, Parshley, Ramel, Reed, Mena, Ryu,
Fosse, Thomas, Cortes, Pollet, Macri, Hill, and Scott
Read first time 02/03/25. Referred to Committee on Finance.
p. 1 HB 1785
NEW SECTION. Sec. 2. A new section is added to chapter 82.04 1
RCW to read as follows: 2
(1) Beginning January 1, 2026, in addition to the taxes imposed 3
under this chapter, a surcharge is imposed on any person with an 4
executive pay ratio of at least 50 to one in the previous calendar 5
year. The surcharge applies to the tax otherwise payable under this 6
chapter after credits under RCW 82.04.440 have been applied. The 7
surcharge is equal to: 8
(a) 10 percent if the executive pay ratio is at least 50 to one 9
but less than 150 to one; and 10
(b) 25 percent if the executive pay ratio is 150 to one or more.11
(2) The surcharge applies to taxes due for the calendar year 12
following the year in which the executive pay ratio under subsection 13
(1) of this section occurred. If the executive pay ratio of a 14
publicly traded company changes during the course of a calendar year, 15
adjustments to the surcharge resulting from the change apply January 16
1st of the calendar year following the year in which the change 17
occurred. 18
(3) If the executive pay ratio as reported to the United States 19
securities and exchange commission, or its successor agency, for the 20
previous calendar year is not disclosed by the taxpayer to the 21
department, the rate of the surcharge imposed is 25 percent for the 22
applicable calendar years. 23
(4) Companies not publicly traded but listed as a subsidiary in 24
the filings of the parent company with the United States securities 25
and exchange commission are subject to the surcharge if the parent 26
company is subject to the surcharge. 27
(5) All revenues collected under this section must be deposited 28
into the state general fund. 29
(6) For the purposes of this section, "executive pay ratio" means 30
the ratio of the annual compensation of the chief executive officer 31
compared to the median annual compensation of all other employees 32
that is required to be disclosed pursuant to section 953 of the Dodd-33
Frank wall street reform and consumer protection act (P.L. 111-203) 34
and reported to the United States securities and exchange commission, 35
or its successor agency. 36
NEW SECTION. Sec. 3. A new section is added to chapter 82.16 37
RCW to read as follows: 38
p. 2 HB 1785
(1) Beginning January 1, 2026, in addition to the taxes imposed 1
under this chapter, a surcharge is imposed on any person with an 2
executive pay ratio of at least 50 to one in the previous calendar 3
year. The surcharge applies to the tax otherwise payable under this 4
chapter after credits under RCW 82.04.440 have been applied. The 5
surcharge is equal to: 6
(a) 10 percent if the executive pay ratio is at least 50 to one 7
but less than 150 to one; and 8
(b) 25 percent if the executive pay ratio is 150 to one or more.9
(2) The surcharge applies to taxes due for the calendar year 10
following the year in which the executive pay ratio under subsection 11
(1) of this section occurred. If the executive pay ratio of a 12
publicly traded company changes during the course of a calendar year, 13
adjustments to the surcharge resulting from the change apply January 14
1st of the calendar year following the year in which the change 15
occurred. 16
(3) If the executive pay ratio as reported to the United States 17
securities and exchange commission, or its successor agency, for the 18
previous calendar year is not disclosed by the taxpayer to the 19
department, the rate of the surcharge imposed is 25 percent for the 20
applicable calendar years. 21
(4) Companies not publicly traded but listed as a subsidiary in 22
the filings of the parent company with the United States securities 23
and exchange commission are subject to the surcharge if the parent 24
company is subject to the surcharge. 25
(5) All revenues collected under this section must be deposited 26
into the state general fund. 27
(6) For the purposes of this section, "executive pay ratio" means 28
the ratio of the annual compensation of the chief executive officer 29
compared to the median annual compensation of all other employees 30
that is required to be disclosed pursuant to section 953 of the Dodd-31
Frank wall street reform and consumer protection act (P.L. 111-203) 32
and reported to the United States securities and exchange commission, 33
or its successor agency. 34
NEW SECTION. Sec. 4. By December 1, 2026, and in compliance 35
with RCW 43.01.036, the department of revenue must submit a report to 36
the legislature regarding the feasibility of extending this act to 37
taxpayers not currently required to disclose executive pay ratio 38
p. 3 HB 1785
under the Dodd-Frank wall street reform and consumer protection act 1
(P.L. 111-203). 2
NEW SECTION. Sec. 5. This act takes effect January 1, 2026.3
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p. 4 HB 1785