Congress

Tax deferrals and big penalties: Lawmakers with stocks face financial upheaval

Published

1 year ago

September 7, 2025

An overwhelming majority of Americans favor banning members of Congress from trading stocks, but efforts to turn that public sentiment into law have long sputtered.

That’s because the lawmakers who would have to approve any overhaul of congressional investing stand to suffer considerable financial impacts — not least of which are potentially hefty tax liabilities if they are forced to sell off long-held stocks.

Now the issue is coming to a head with a new House bill that has a strange-bedfellows coalition of hardcore conservatives and good-government liberals behind it, and they are hoping they can convince their more skeptical colleagues to accept some new financial realities.

Under proposed language, lawmakers would be able to take advantage of a rare perk generally not available to the public, which would allow them to defer taxes on the sale of prohibited securities. On the flip side, they would face hefty penalties if they fail to sell off their holdings.

If passed, the bill would permanently change the financial calculations of any member or would-be lawmaker. The tax arrangement, for instance, could prove immensely useful to wealthy people who want to diversify their assets. But it could dissuade investors who have no interest in abandoning lucrative stakes for workaday mutual funds.

Proponents of the new bill say taking historic steps towards eliminating conflicts of interest for lawmakers who hold stocks is worth the upheaval. A 2023 University of Maryland poll found 86 percent of registered voters support a ban on member trading.

“Eliminating corruption, eliminating conflicts of interest, is the North Star that we have set out to accomplish,” said Rep. Seth Magaziner (D-R.I.), the lead sponsor of the legislation, said in an interview Thursday.

“In order for that to work, you have to deal with the tax implications,” he added. “Otherwise, not only existing members, but anyone who wants to run for Congress could face a big tax bill upon being elected.”

According to the bill, which is co-led by Rep. Chip Roy (R-Texas), current members would have 180 days to divest from individual stocks, while incoming members would have 90 days to do so. It’s a more aggressive approach than other proposals that would allow for blind trusts, where a member or candidate keeps their stock holdings but relinquishes control of investing decisions.

Selling stocks typically triggers at least a 15 percent tax on all the capital gains accumulated since the individual bought the stock. For wealthy Americans with longstanding holdings, that could mean forking over huge sums that could otherwise sit in their portfolios and continue to appreciate.

But under the Magaziner-Roy bill, lawmakers could apply for a certificate that would allow them to reinvest the proceeds from those sales into mutual funds or Treasuries without having to pay any taxes until they are ultimately sold.

It’s a process that is currently available to executive branch employees to blunt the tax impact of having to divest due to conflict-of-interest requirements. It was first enacted 1989 at the behest of former President George W. Bush, who had tapped a slew of Wall Street executives to serve in his administration who would have otherwise faced big tax bills.

Rep. Don Beyer (D-Va,), a member of the tax-writing Ways and Means Committee and one of the wealthiest members of Congress, said he knows the tax consequences of divesting first-hand. He’d spoken to a wealthy former House colleague, Dean Phillips, about his experience setting up a blind trust.

“Oh my god, it was so complicated and so expensive that my wife and I just made the decision: We’re just going to sell it all and put it in mutual funds,” said Beyer in a Wednesday interview.

“I got hit with a big tax bill, which was not fun,” he added. “It was a couple hundred thousand dollars. It was way more than I wanted because of the appreciation.”

Proponents of the new trading ban legislation argue that the tax deferral arrangement is preferable to allowing blind trusts from a conflict-of-interest perspective.

Even if a blind trust precludes active management of stocks, lawmakers could still make decisions based on the stocks that they know went into their trust, according to Emma Lydon, managing director of progressive government relations group P Street.

And the bill’s backers say there’s no way to pass a bill ordering members to sell stocks without including the tax break. Said Magaziner, “I would characterize it as a mechanism to help members comply with what would be the toughest ethics reform to be passed in Congress in a generation.”

Rep. Anna Paulina Luna (R-Fla.), who is spearheading an effort to compel a House vote on separate stock trading ban legislation from Rep. Tim Burchett (R-Tenn.), said members are “not getting any special preferential treatment” and she wants “massive penalties” on her colleagues who engage in insider trading.

“We’re trying to incentivize members who currently engage in stock trades … to actually vote for it, because we need this to pass,” she said.

The penalties for failing to divest vary across several proposed bills. Burchett’s bill would impose a maximum fine of $100,000 per violation, while Magaziner’s consensus bill would impose a fine of 10 percent of the value of the prohibited investment and require any profits from it to be disgorged.

It’s just one part of the bite from the legislation that is making many lawmakers privately balk. Skeptics include House Small Business Chair Roger Williams (R-Texas), a wealthy car dealer who said he has “to think about it because … we give up a lot to come up here.”

Other skeptical members include Rep. Mike Kelly (R-Pa.), whom the House Ethics Committee charged in July with violating the House’s code of conduct. Kelly’s wife bought shares of a steel company around the time her husband was briefed on a trade investigation affecting it, though the committee found no evidence he knowingly caused his wife to act on inside information.

Kelly argued his family had many preexisting connections to the steel company, which owns a facility in their hometown, and that lawmakers should continue to be able to trade individual stocks as they please.

He suggested a stock-trading overhaul would not have much effect on public impressions of Congress, citing a conversation he’d had years ago with the late Rep. Don Young (R-Alaska).

“He says people used to complain because we had ice delivered to our offices every day, so if we [do] away with that, maybe our ratings will go up,” Kelly recalled. “So we got rid of it, and our ratings went down.”

Congress

Sanders to rally for Troy Jackson in Maine

Published

4 hours ago

October 2, 2026

Blue Light Newsroom

Sen. Bernie Sanders will hit the road for Troy Jackson in Maine starting Oct. 10, the first time the progressive leader will stump for the candidate this cycle.

The Vermont independent plans to hold three rallies with Jackson, according to an itinerary shared first with Blue Light News: first in Bangor on Oct. 10th followed by Lewiston and Biddeford on Oct. 11.

The Maine swing will kick off Sanders’ travel for the final stretch of the midterms, covering ground throughout October for House and Senate candidates, POLITICO reported.

“Bernie and Troy know that working people built this country and deserve a government that fights for them,” Jackson spokesperson Dan Gottlieb told Blue Light News. “Susan Collins has had nearly 30 years to deliver, and working Mainers are still getting squeezed while she serves the billionaires and corporate interests who bankroll her campaigns. Mainers don’t need another six years of excuses.”

Sanders campaigned ahead of major wins for progressives in the primary season, speaking at more than 60 rallies since last year’s Fight the Oligarchy tour and endorsing more than 90 candidates up and down the ballot.

He’s also opening his substantial $23 million campaign war chest, POLITICO reported, and contributing hundreds of thousands of dollars toMinnesota Lt. Gov. Peggy Flanagan’s Senate campaign and others including Angie Nixon in Florida and Minnesota Attorney General Keith Ellison,

Sanders will return to Maine after initially backing Graham Platner’s campaign for Senate. Allegations reported by POLITICO ultimately led him to call on the Democratic nominee to drop out of the race.

Sanders had not formally endorsed Jackson since he clinched the nomination from Platner, though he previously backed Jackson’s initial run for governor.

Congress

Hill: Trump’s ‘lack of favorability’ creating challenging politics

Published

5 hours ago

October 2, 2026

Blue Light Newsroom

House Financial Services Chair French Hill said he has “no concerns” about winning back his Arkansas seat in the upcoming midterm elections, but the six-term House member acknowledged the political headwinds for his party.

“I consider the atmosphere a very tough political environment right now because of President [Donald] Trump’s lack of favorability at the top, and you know people are concerned about, as I say, what it’s like to live under an inflated economy the last four years,” Hill said in an interview.

Hill is in a solidly red district, according to the nonpartisan Cook Political Report, and said he is up against a “weaker candidate this time than I’ve had in past races.” Polling in the district, however, has shown a tighter race. The two polls done this year placed Democratic challenger Chris Jones ahead of Hill by a few percentage points. Any perceived polling victory for Jones is still well within the margin of error, and one of the polls had a Democratic sponsor.

Stephannie Lane Baker, a spokesperson for Jones, said that “of all the Republicans in Congress, the chairman of the Financial Services Committee doesn’t get to dodge responsibility for this economy. He’s in trouble, and he knows it.”

Additionally, Illinois Gov. JB Pritzker’s PAC, Ready for the Fight, committed more than $1 million in television ads through the next five weeks for Jones’ race in Arkansas’s 2nd District, Jordan Abudayyeh, a spokesperson for the PAC confirmed. Overall Democratic spending on advertising for the race was just over $1 million, primarily made up by contributions from the Ready for the Fight PAC, with Republicans spending almost $2.7 million on ad buys, according to AdImpact, an advertising tracking service.

Hill said he has addressed affordability concerns “head on” this Congress.

“My work on housing, my work on the Price Stability Act, my work to try to reduce waste, fraud, and abuse, and drop the federal budget deficit as a percentage of GDP,” Hill said. “All these things can contribute to a more affordable environment for people. So I’ve tried to make that a forefront of my campaign this year.”

Hill was a key architect of the 21st Century ROAD to Housing Act, a bipartisan housing affordability bill that became law in July. The Price Stability Act, which is unlikely to become law this year, would narrow the Federal Reserve’s current dual mandate of pursuing maximum employment and price stability to focus exclusively on containing inflation.

Congress

Sanders, AOC, Merkley propose bill to ban Flock cameras

Published

10 hours ago

October 2, 2026

Blue Light Newsroom

Rep. Alexandria Ocasio-Cortez (D-N.Y.) and Sens. Bernie Sanders (I-Vt.) and Jeff Merkley (D-Ore.) on Friday released text of legislation intended to ban the use of Flock surveillance cameras and other license plate readers.

Flock has faced severe public backlash against the surveillance technology following reports that police officers misused the technology to track women, and it has the largest network of license plate readers across the U.S. Sens. Josh Hawley (R-Mo.) and Dick Durbin (D-Ill.) hosted a hearing last month probing its potential misuses, although the company’s CEO Garrett Langley did not appear.

The latest bill, unveiled Friday and named the Ban Flock Act, would bar federal agencies from using automated license plate readers or accessing data from the technology and prevent federal grants from funding states and local governments that use automated license plate readers.

“At a time of growing concern about the unchecked power of artificial intelligence, Flock is eviscerating the very notion of privacy by installing tens of thousands of cameras in communities across America without their consent,” Sanders, who has positioned himself as a leading progressive voice on AI technology, said in a statement. “We cannot allow America to become a surveillance state where a handful of AI oligarchs profit by giving the government the power to track our every movement.”

Ocasio-Cortez similarly condemned the surveillance capabilities of the technology and said the bill would “enforce our constitutional right to privacy and protect Americans from both corporate and government surveillance.”

“No one should have this unchecked surveillance power at their fingertips,” Merkley added.

Republicans have introduced similar efforts to regulate license plate readers, such as Hawley’s Stop Flock Abuse Act, which would require audits and limits on unauthorized searches.

Flock did not immediately respond to a request for comment.