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HB 4603

Corporate income tax: rate; pay ratio surcharge for certain corporations; provide for. Amends 1967 PA 281 (MCL 206.1 - 206.847) by adding sec. 684.

2025-2026 Regular Session Introduced by Emily Dievendorf and 4 co-sponsors

Michigan bill adds corporate tax surcharge for companies with high executive-to-worker pay ratios to address income inequality and generate state revenue.

bill electronically reproduced 06/10/2025
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Bill Summary · HB 4603

Legislative bill overview

HB 4603 proposes amending Michigan's Corporate Income Tax Act (MCL 206.1 - 206.847) by adding a new section 684, which would implement a pay ratio surcharge on certain corporations. The bill targets companies based on the ratio between executive compensation and worker compensation, creating an additional tax burden for corporations exceeding specified pay ratio thresholds.

Why is this important

This bill addresses income inequality concerns by using the tax code to discourage extreme pay disparities within corporations. If enacted, it would generate state revenue while potentially incentivizing corporations to either reduce executive compensation or increase worker wages to avoid the surcharge penalty.

Potential points of contention

  • Competitiveness concerns: Critics argue the surcharge could drive corporations to relocate to other states with lower tax burdens, potentially reducing Michigan's tax base and business investment
  • Implementation complexity: Defining and auditing pay ratios across diverse corporate structures and compensation methods (stock options, deferred compensation, etc.) creates administrative challenges
  • Economic effectiveness debate: Proponents see it as addressing inequality; opponents question whether it effectively changes corporate behavior or simply increases costs passed to consumers or lower-wage workers

Compiled from official sources — confirm details with the bill’s official record.

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