November 30, 2017

Whitehouse, Baldwin Introduce Amendment to Prevent Tax Windfalls for Trump Administration Billionaires

Legislation would curb a tax loophole that allows appointees to delay tax bills, reap massive tax benefits

Washington, DC – Senator Sheldon Whitehouse (D-RI) has introduced an amendment to Senate Republicans’ tax proposal that would help to prevent President Donald Trump’s enormously wealthy cabinet nominees from ducking millions of dollars in taxes.  The amendment would limit a tax provision that allows executive branch and judicial appointees to defer paying taxes on profits from assets they sell to comply with ethics rules.  The amendment is based on Whitehouse’s No Windfalls for Government Service Act, first introduced last December, which would limit to $1 million the amount of capital gains that can be deferred under the program, stopping billionaires from getting outsized tax write-offs.  Senator Tammy Baldwin (D-WI) joined Whitehouse in introducing the legislation. 

“This amendment would keep billionaires from reaping enormous tax benefits when they choose to serve in important federal posts.  The ultra-wealthy don’t need a financial incentive to enter public service,” said Senator Whitehouse.  “This is another one of the important steps we can take to make our tax code fairer to the middle class.”

“When billionaires move through the revolving door from the private sector to public service they should not be rewarded with tax loopholes,” said Senator Baldwin. “President Trump has every right to fill his cabinet with billionaires and he has, but these wealthy insiders should not be allowed to dodge paying their fair share of taxes.”

Allowing government appointees to delay paying taxes can help middle-class individuals transition to government service.  However, as the Washington Post reported last December, this can be a lucrative benefit for ultra-wealthy appointees who can use it to rebalance their portfolios and save millions of dollars in taxes.

Section 1043 of the tax code, added during the George H. W. Bush administration, allowed former Goldman Sachs CEO and George W. Bush Treasury Secretary Henry Paulson to avoid paying an estimated $200 million tax bill, according to The Economist.  Donald Trump selected several billionaires to helm federal agencies, including hedge fund manager and former Goldman Sachs executive Steven Mnuchin for Treasury Secretary, billionaire investor Wilbur Ross for Commerce Secretary, and Republican mega-donor Betsy DeVos for Education Secretary. 

The No Windfalls for Government Service Act has been endorsed by Americans for Tax Fairness, Citizens for Responsibility and Ethics in Washington, and Public Citizen.


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