HF1041

Purpose

To raise revenue by imposing an additional tax on certain corporations with a high ratio of principal executive officer pay to the median worker pay, and to prevent those same corporations from receiving state subsidies and grants.

Main Provisions

• Adds an additional corporate tax targeting companies that have a high chief executive officer (principal executive officer) pay relative to the median worker pay.
• Establishes a disqualification from eligibility to receive state grants for corporations that are subject to the additional tax, meaning they would be ineligible for grant funding.
• Requires the grant-awarding agency to collect and review additional information as needed to determine eligibility.
• The authority for the additional tax comes from Minnesota Statutes section 290.06, subdivision 1, paragraphs b to j, and the new grant-disqualification rule is added to Minnesota Statutes 16B.981, subdivision 7.

How this changes current law

• Creates a new link between tax policy and access to state funding: corporations subject to the new tax can no longer receive state grants or subsidies.
• Expands the set of criteria used to decide which corporations can qualify for state financial assistance by adding a governance/ compensation-related condition.
• Gives grant-awarding agencies explicit authority to request more information to determine whether a company should be disqualified.

Administration & Implementation

• The grant-awarding agency is empowered to require additional information to determine whether a corporation meets the disqualification criteria.
• Implementation details (how the ratio is calculated, thresholds, and which corporations are affected) would be defined as the bill’s provisions referenced (section 290.06 subdivision 1, paragraphs b to j) and related statutory guidance.

Relevant Terms - additional tax - corporate franchise tax - principal executive officer pay ratio - CEO-to-median worker pay ratio - median worker pay - high pay ratio - grants - subsidies - disqualification from eligibility to receive grants - grant-awarding agency - Minnesota Statutes 16B.981 - Subdivision 7 - section 290.06 subdivision 1, paragraphs b to j - eligibility criteria - state funding restrictions - information collection for eligibility