Baldwin, Whitehouse, Warren, and Feinstein Introduce Bill to Limit Tax Windfalls for Billionaires in the Trump Administration
Legislation would curb little-known tax loophole that allows appointees to delay their tax bills
WASHINGTON, D.C. – Senators Tammy Baldwin (D-WI), Sheldon Whitehouse (D-RI), Elizabeth Warren (D-MA), and Dianne Feinstein (D-CA) reintroduced legislation today to prevent President-elect Donald Trump’s enormously wealthy cabinet nominees – and possibly Trump himself – from ducking millions of dollars in taxes. A little-known provision of the tax code currently allows executive branch and judicial appointees to defer paying taxes on profits from assets they sell to comply with ethics rules. The Senators’ No Windfalls for Government Service Act, first introduced in December, would limit to $1 million the amount of capital gains that can be deferred under the program, stopping billionaires from reaping outsized tax write-offs.
“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-elect 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.”
“As Donald Trump prepares to nominate what could be the wealthiest cabinet in history, this bill would prevent billionaires from reaping enormous tax benefits from their new jobs,” said Senator Whitehouse. “The ultra-wealthy do not need a financial incentive to enter public service.”
“Not only is Donald Trump giving a gang of billionaires control of our government, he’s offering them a special tax break just for signing up,” said Senator Warren. “This bill would stop billionaires from getting yet another special favor from Donald Trump.”
“It’s inappropriate for the federal government to provide excessive tax breaks to Cabinet members in return for complying with ethics rules. Public service is an honor, and billionaires shouldn’t require federal tax breaks for their service. This bill appropriately limits tax benefits for wealthy Cabinet members who must remove their own conflicts of interest,” said Senator Feinstein.
Allowing government appointees to delay paying taxes can help middle-class individuals transition to government service. However, as the Washington Post reported in 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. So far, Donald Trump has 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. Historians expect the cabinet to be the wealthiest ever, and the Washington Post has noted that Mr. Ross alone is ten times wealthier than George W. Bush’s entire first cabinet in 2001.
The bill has been endorsed by Americans for Tax Fairness; Citizens for Responsibility and Ethics in Washington; and Public Citizen.
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