A bill to amend 1967 PA 281, entitled “Income tax act of 1967,” (MCL 206.1 to 206.847) by adding section 684.
The proposed legislation introduces an annual surcharge on taxpayers required to make a pay ratio disclosure under 17 CFR 229.402(U), effective for tax years beginning on and after October 1, 2024. The surcharge is calculated based on the taxpayer's disclosed pay ratio, which compares the compensation of the principal executive officer to the median employee compensation. The surcharge rates are tiered: 0% for a pay ratio of 50 to 1 or less, 5% for ratios between 50 to 1 and 100 to 1, 10% for ratios between 100 to 1 and 200 to 1, 20% for ratios between 200 to 1 and 300 to 1, 30% for ratios between 300 to 1 and 400 to 1, 40% for ratios between 400 to 1 and 500 to 1, and 50% for ratios of 500 to 1 or higher. The surcharge does not apply to taxpayers exempt from filing a return or paying the tax under section 685. For unitary business groups, the requirement to disclose a pay ratio applies if any member of the group is required to do so. If a Securities and Exchange Commission (SEC) filing fails to disclose a pay ratio or if the disclosed ratio is incorrect, the Department may determine the correct ratio and surcharge. The surcharge is considered part of the tax imposed under the Income Tax Act of 1967 and will be administered, collected, and enforced accordingly. Definitions for "disclosed pay ratio," "pay ratio," and "SEC" are provided to ensure clarity.
Co-sponsored by Reps.
Referred to the Committee on Tax Policy
