S. 5448: Anti-Corruption Tax (ACT) Act

This bill would create a new federal income tax aimed at certain earnings connected to favorable government actions involving top public officials and their families.

What the tax does

The bill would add a 100% surtax on “public office windfall income.” In plain terms, that means if certain income is traced to a government action that especially benefits a covered official, the bill would tax that income at the full amount, on top of any other taxes already owed.

Who is covered

The tax would apply to a “covered individual,” meaning:

• a current or former President or Vice President,
• a current or former top executive branch official at Level I of the Executive Schedule,
• the spouse of one of those officials during the time of the relevant government action, and
• their child, as defined in the tax code.

What counts as covered income

The tax would apply to income that is attributable to a “covered favorable government action.” The bill defines this as a discretionary federal action taken while the official is serving, if the action is directed to the covered individual or an entity they beneficially own, is expected to provide a substantial economic benefit, and falls into one of several categories, including:

• issuing bank, trust, payment, digital asset, or other financial-related charters, licenses, registrations, or approvals;
• issuing a federal license or franchise;
• granting discretionary permits or other non-routine authorizations;
• awarding leases involving public lands, mineral resources, offshore energy, or other valuable federal assets;
• awarding federal contracts;
• granting waivers, exemptions, or similar individualized relief from federal requirements;
• awarding discretionary federal financial assistance, such as grants, loans, loan guarantees, or cooperative agreements; and
• approving mergers, acquisitions, consolidations, changes in control, or similar transactions that need federal approval.

How it would be applied

The bill says the tax would apply to taxable years ending after January 20, 2025. That means it would reach back to that date for the tax years it covers. The bill also states that the covered favorable government action must be discretionary, not routine or purely ministerial.

Practical effect

In practice, the bill is meant to tax away income that may arise when certain officials or their families receive business benefits from government actions taken during the official’s service. It would not create a new criminal offense; instead, it changes tax treatment by imposing a very high surtax on the affected income.

Relevant Companies

• None found