Feb. 28 (Bloomberg) — Companies would be prohibited from taking income-tax deductions for their top executives' pay exceeding $1 million, even if it's based on performance, under a plan from the top Republican tax writer in Congress.

The proposal, released this week by Representative Dave Camp of Michigan, would tighten rules that Congress first put in place in 1993. Current law exempts performance-based pay from the $1 million annual limit. That encourages companies to raise base salaries to that level and reward executives with options, said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware.

The executive compensation change would raise $12.1 billion over 10 years and help finance lower tax rates. Camp's broader tax plan, which isn't expected to become law this year, is a blueprint for future efforts to revamp the tax code. Companies and business groups are trying to prevent provisions that harm them from advancing.