Congress

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

Published

10 months 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

Congressional Black Caucus blasts Slotkin over her calls for new leadership in the House

Published

11 hours ago

June 27, 2026

Blue Light Newsroom

The Congressional Black Caucus is emphatically declaring its support for House Minority Leader Hakeem Jeffries — and denouncing Sen. Elissa Slotkin’s call for new leadership in Congress.

In a statement posted to social media on Friday, the entirely Democratic CBC declared that it stands united behind the nation’s first Black minority leader of the House. The caucus accused the Michigan senator of “posturing for higher office in 2028” and called attention to her votes to approve multiple members of President Donald Trump’s Cabinet.

“House Democrats don’t need a lesson on reading the political moment from someone who handed Donald Trump one of the most corrupt Cabinets in American history,” the CBC said. “Voting to confirm Kristi Noem, Pam Bondi, and five other Trump Cabinet secretaries is not the posture of someone who understood the moment’ after 2024.”

The CBC closed its defense of Jeffries with a sharp parting shot of remaining focused on providing for Americans rather than “engaging in distractions that only serve to divide Democrats at a moment when unity and resolve are essential.”

A spokesperson for Slotkin, who has repeatedly called for a new generation of leadership in Congress, did not immediately respond to a request for comment.

Congress

Key Democrats urge House to reject kids’ safety proposal

Published

14 hours ago

June 26, 2026

Blue Light Newsroom

The Commerce Committee’s top Democrat Maria Cantwell (Wash.) and Sen. Richard Blumenthal (D-Conn.) warned House lawmakers against advancing their chamber’s version of the Kids Online Safety Act, arguing it would face intense lobbying from tech companies in the Senate and risk unraveling years of bipartisan work.

“If it is passed by the House it will come to the Senate,” Blumenthal, the bill’s Senate cosponsor, told reporters at a Friday press briefing. The Connecticut Democrat said he is concerned senators will be influenced by the tech industry’s “armies of lawyers and lobbyists” who may “confuse and exploit” misunderstandings about a House bill with the same name as a Senate version but excludes key provisions, such as the “duty of care.” (This concept requires online companies to design social media platforms with an eye for children’s safety.)

“We’re not going to let bad legislation with a good title just get across and think somebody’s done something,” Cantwell said.

The House version of KOSA — which is included in the KIDS Act, a revised bipartisan package that the Energy and Commerce Committee advanced along party lines in March — is scheduled to be considered on the House floor next week under suspension of the rules.

“We need to stop this bill in the House, and we need to prevent the White House from forming an alliance with Big Tech on this issue,” said Blumenthal, who characterized the version of KOSA that House leadership is pushing as a “sham.”

Both Democratic lawmakers also expressed concern that Senate Commerce Committee Chair Ted Cruz (R-Texas) could adopt the House version of KOSA in a kids’ safety package he has yet to publicly release but has pledged to markup by August recess. Cruz said “negotiations are ongoing” earlier this week when asked by Blue Light News whether he would be open to incorporating such changes put forward in the House.

Cruz’s package is expected to include KOSA as well legislation barring companies from using minors’ personal data for targeted advertising, banning kids under age 13 from social media, and providing greater oversight for how children interact with AI chatbots.

Although Blumenthal remains hopeful that Cruz will “stay true to his first vote in favor of KOSA,” which overwhelmingly passed in the Senate last Congress, the Connecticut Democrat said Friday he’s worried Cruz and others may be tempted to “take the bait” and abandon the bill’s basic principles.

Congress

Moderates beware: Mamdani coalition portends a dramatically different Democratic Party in NYC

Published

17 hours ago

June 26, 2026

Blue Light Newsroom

NEW YORK — A coalition powered by Mayor Zohran Mamdani expanded the left’s reach Tuesday, winning younger voters across racial and ethnic lines and once again upending conventional wisdom about elections in New York City.

A series of hotly contested congressional and state elections pit a slate of Mamdani-backed democratic socialists and progressives against establishment candidates who, in several cases, differed little on policy aside from U.S.-Israel relations.

The results were staggering.

Midterm election cycles in deep-blue New York City tend to be sleepy affairs. Both this year and in 2022, just over 500,000 people cast ballots, less than 20 percent of eligible voters. But turnout within a congressional district spanning Upper Manhattan and the Bronx increased by roughly 50 percent between 2022 and Tuesday, with more than 66,000 voters heading to the polls.

In another seat covering parts of Brooklyn and Queens, turnout more than doubled from 2022, though state and federal elections were held on different days that year and the seat was not competitive, which would have reduced the number of voters going to the polls.

Congressional candidates backed by the Democratic Socialists of America were able to replicate the mayor’s success by winning younger Latino voters in Brooklyn and a majority of Black voters in Harlem. Combined with the DSA’s base in relatively wealthy neighborhoods, the result charted the far left’s broadening appeal and a potential reorientation of the electorate that will influence races for years to come.

“This was a big wave for DSA and they did a good job capitalizing on it,” said Evan Roth Smith, a pollster with Slingshot Strategies. “The question now is: Was this a wave cycle that will abate, or is it the start of the takeover?”

Much of Mamdani’s base is concentrated in the so-called “commie-corridor,” a series of neighborhoods along the Brooklyn-Queens waterfront filled with young, educated and affluent voters who’ve propelled several DSA candidates into office. They went gaga over Mamdani’s candidacy and, as Tuesday’s results show, will turn out for candidates he supports.

The area was crucial to Assemblymember Claire Valdez’s crushing 56-38 defeat of Brooklyn Borough President Antonio Reynoso.

“The factor that felt most significant to me were all of these New Yorkers who got activated and politicized in the mayor’s race last year who were looking for the next fight,” said Andrew Epstein, a political adviser to Mamdani who worked on Valdez’ campaign. “Those people didn’t go away. And they want to keep going.”

Valdez also won several heavily Latino areas that were expected to break for her opponent.

Reynoso was born in Brooklyn to Dominican parents and just a few years ago was a City Council member representing Bushwick, a long-gentrifying Brooklyn neighborhood that’s home to Latino families and young hipsters. Valdez was born in Texas, moved to New York City in 2015 and served in the state Assembly for just one term before launching her Mamdani-backed bid for retiring Rep. Nydia Velázquez’s seat.

She ended up winning areas of Bushwick by even greater margins than the total results — in some election districts winning upwards of 80 percent of the vote.

“You don’t win the district by 35 points if you don’t have broad advantages across age and demographic groups,” said Michael Lange, an election analyst and Mamdani supporter who has tracked several contested races with extreme granularity. “Is she blowing him out of the water with Hispanic voters under 50? I see tons of evidence that the answer is yes.”

The age advantage was the common thread across several other races.

In Upper Manhattan and the Bronx, for example, younger Black voters in Harlem were key to Darializa Avila Chevalier’s win over Rep. Adriano Espaillat, the chair of the Congressional Hispanic Caucus who had built a small political empire in the district.

While gentrifying, the neighborhood remains a seat of Black political power and is home to younger households who tend to rent. That particular demographic is a strong indicator of why Mamdani won the area in 2025, even as he lost the Black vote overall to former Gov. Andrew Cuomo, whose support was concentrated among older Black homeowners in Brooklyn and Queens.

While Espaillat never healed a rift with the Black community in upper Manhattan opened during his election in 2016, which contributed to his weak performance, Avila Chevalier demonstrated Tuesday that a significant share of voters there were not just supportive of Mamdani the person, but of the broader political movement he’s now leading.

Overall, she edged out Espaillat with Black voters 48-46, according to an analysis from The New York Times, which charted demographic breakdowns for several contested races.

Three winning congressional candidates endorsed by Mamdani — including former city Comptroller Brad Lander in Brooklyn, who unseated incumbent Dan Goldman — share several similarities. They won younger, college-educated and wealthier voters by huge margins, in several cases by 30 points or more, and lost lower-income voters to incumbents or candidates affiliated with incumbents — a sign that the movement seeking to boost struggling New Yorkers has not won them over.

While the DSA was able to win three state races without the support of Mamdani — a testament to the organizing prowess of the left that was essential to reactivating the mayor’s coalition — there were limits to the city’s leftward shift.

Rep. Grace Meng won her reelection race, though she only vanquished challenger Chuck Park by 14 points, an uncomfortable margin for an incumbent of her stature. Park, who ran to Meng’s left, was boosted by a huge turnout in Woodside, Queens, a multiethnic neighborhood that went heavily for Mamdani in last year’s mayoral race.

Elsewhere in the Bronx, however, incumbents remained strong. Rep. Ritchie Torres handily won reelection with 72 percent of the vote, though it was a low-turnout affair more consistent with an uncompetitive midterm. Nevertheless, House Minority Leader Hakeem Jeffries touted the results — even as he watched a series of his endorsed candidates fall to the DSA in Brooklyn, his home borough, in a preview of the intraparty battles to come.

“In some higher-income districts, there was an outsized focus on the Middle East. In other districts, for instance, in the South Bronx, Ritchie Torres ran against somebody who was heavily critical of his position on Israel, and he won by fifty points,” Jeffries told MS NOW on Wednesday.