The overall package came from Chairman Max Baucus (D-Montana) and the panel’s senior Republican Senator Charles E. Grassley of Iowa and carries a price tag of $8.3 billion over 10 years. The deferred comp provision was estimated to generate $307 million over five years and $806 million over 10 years. All in all, deferred comp and other tax provisions are estimated to generate more than $8 billion over a decade.

Under the deferred comp plan as it now stands, any deferred comp over the lesser of $1 million or average taxable compensation for last five years would be immediately includible in income and subject to 20% additional tax as under the 409A rules. Washington attorney Brigen Winters, of the Groom Law Group, said the measure’s definition of nonqualified deferred comp could ultimately be extremely broad, similar to the current 409A definition.

In addition to deferred comp being broadly defined, Winters said the provision’s cap could potentially come in at under $1 million, which could affect managers below the top of corporations. “It’s not just top execs,” Winters said.

Limiting deferred compensation would be “earthshaking” to American executives, Patrick McGurn, executive vice president of Institutional Shareholder Services, told the Washington Post.

“A lot of executives are deferring the lion’s share of their compensation these days, and the typical executive at a Fortune 100 company makes well over $1 million,” according to McGurn. He said there is a huge amount of compensation that executives would defer that will not be allowed to be deferred if the tax code were changed.

Winters said it appeared politically likely the deferred comp provision would survive a trip through the Senate.

The proposal is effective for amounts deferred in taxable years beginning after December 31, 2006, according to Senate documents. The proposal directs the Treasury Department to issue guidance allowing existing outstanding deferral elections to be modified on or before December 31, 2007.