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Bill

HB 1785

Imposing a surcharge on publicly traded companies providing excessive executive compensation.

2025-2026 Regular Session Introduced by Liz Berry and 12 co-sponsors

Washington bill would tax publicly traded companies with high executive pay to address income inequality, but faces disputes over defining "excessive" and potential business relocation risks.

First reading, referred to Finance.
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Bill Summary · HB 1785

Legislative bill overview

HB 1785 would impose a surcharge on publicly traded companies operating in Washington that provide what the bill defines as "excessive" executive compensation. The bill, sponsored by five Democratic legislators, has been referred to the Finance Committee for review and represents an attempt to address income inequality through tax policy targeting executive pay packages.

Why is this important

Executive compensation ratios have grown dramatically over recent decades, with CEO-to-worker pay ratios reaching 300+ to 1 in many large companies compared to historical ratios around 20 to 1. This bill reflects growing policy interest in using tax mechanisms to address wealth concentration and could generate state revenue while signaling concerns about corporate governance, though its practical implementation and economic effects remain uncertain.

Potential points of contention

  • Definition and measurement challenges: The bill must define "excessive" compensation precisely, which is inherently subjective and could be contested as arbitrary. Determining what triggers the surcharge (specific dollar amounts, pay ratios, percentage thresholds) involves complex policy choices with significant compliance implications.
  • Economic competitiveness concerns: Opponents will likely argue that additional surcharges on Washington-based companies could discourage corporate headquarters location in the state or incentivize relocation, potentially reducing tax revenue and jobs despite the surcharge's intent.
  • Constitutionality questions: The bill may face legal challenges regarding whether it unconstitutionally targets specific industries or violates interstate commerce principles, particularly if it applies only to Washington-headquartered firms or those with significant Washington operations.

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

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