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HF 1041

Corporations with high principal executive officer additional tax imposed to median worker pay ratios, and companies disqualified from receiving state subsidies and grants.

2025-2026 Regular Session Introduced by Brion Curran and 13 co-sponsors

HF 1041 taxes and restricts subsidies for corporations with high PEO pay relative to median workers, tying costs and state aid to pay-ratio benchmarks.

Author added Falconer
#taxation
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WeVote Research Nonpartisan
Bill Summary · HF 1041

Summary of HF 1041 (2025-2026) – Minnesota

Overview

HF 1041 proposes a set of annual taxes and eligibility restrictions targeted at certain corporations with high chief executive officer (CEO) compensation relative to median worker pay. The bill also aims to influence state subsidies and grants by disqualifying certain corporations from receiving them. The underlying intent appears to be to incentivize lower executive pay disparities and limit state support for companies with large pay gaps between executives and typical workers.

Purpose and Intent

  • To impose additional tax obligations on corporations that have high principal executive officer (PEO) pay relative to the median pay of workers.
  • To create thresholds or metrics tying executive compensation to worker pay, with the aim of addressing income inequality within companies.
  • To condition or restrict access to state subsidies and grants for corporations that fail to meet specified pay-ratio or related criteria.
  • In sum, the bill seeks to align corporate compensation practices with broader state policy goals on fairness and responsible use of public dollars.

Key Provisions and Changes (as described)

  1. New or Additional Tax Imposition

    • Establishes a tax or surcharge on corporations whose PEO compensation is substantially higher than the median worker pay.
    • The mechanism likely involves calculating a ratio (CEO/PEO pay vs. median worker pay) and applying an additional tax based on that ratio or a specified threshold breach.
    • Details such as tax rates, thresholds, base year, and calculation methodology are not provided in the summary but would be defined in the full bill text.

  2. Pay Ratio Metrics

    • Requires reporting or utilization of pay ratio data (CEO/PEO compensation relative to median worker pay) to determine eligibility for the tax and/or subsidies.
    • May necessitate annual reporting by covered corporations or use of existing Minnesota Department of Revenue or labor data.

  3. Eligibility for State Subsidies and Grants

    • Establishes disqualification criteria for state subsidies and grants based on corporate pay-ratio performance or other related criteria.
    • Companies with high pay ratios relative to median worker pay could be barred from receiving state financial assistance or could face reduced support.

  4. Administrative and Compliance Provisions

    • Likely includes definitions, enforcement mechanisms, and penalties for noncompliance.
    • May specify reporting timelines, responsible agencies, and procedures for appealing determinations.

Who Would Be Affected

  • Covered Corporations: Likely larger Minnesota corporations with high PEO pay relative to median worker pay. These entities would face the proposed tax, reporting obligations, and potential loss or restriction of state subsidies/grants.
  • Employees and Workers: Indirectly affected through potential changes in corporate compensation strategies and the availability of state incentives that could influence investment or operations.
  • State Agencies: Agencies responsible for tax administration, grant/subsidy allocation, and enforcement would implement the new provisions and collect/pay out subsidies accordingly.

Procedural and Timeline Aspects

  • Introduction and First Reading: February 17, 2025.
  • Authorship: Falconer added as an author on February 19, 2025.
  • Next Steps (pending): Referral to the Taxes committee for consideration, with potential hearings, amendments, and eventual floor votes as part of the 2025-2026 session process.

Notes for further detail

  • The bill’s full text would clarify specific thresholds for pay ratios, tax rate, calculation methodology, defining “principal executive officer,” and the exact criteria for disqualification from subsidies.
  • Additional provisions may address phased implementation, transitional rules, and exemptions (e.g., smaller employers, certain industries, or already-qualified grants).

If you’d like, I can tailor this summary to a specific audience (e.g., policymakers, business leaders, or the general public) or incorporate any available fiscal notes or committee hearing remarks.

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

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