Stop Presidential Embezzlement Act

The bill changes federal tax law to add a new chapter that applies to certain civil lawsuit payments. It says that if a “covered person” gets money as damages from a civil case they filed against the United States or a federal agency, that money will face a special 100% tax. This means the full amount of those damages would be owed back as tax. A “covered person” is anyone who has served as President, Vice President, a Level I Executive Schedule official (very senior executive branch positions), or a Member of Congress, including Delegates and the Resident Commissioner. It also includes people who are related to these officials under existing tax law rules about related parties. The rule applies to damages received by settlement, verdict, judgment, or any other way, as long as the case was filed against the United States and key events in the case happen during a set time window. That time window, called the “applicable period,” starts when the individual first becomes President and ends one year after they last serve as President. The 100% tax applies to damages received by any covered person during this period from eligible lawsuits. At the same time, the bill says those lawsuit payments do not count as “gross income” for regular income tax. However, the person cannot deduct the 100% tax as an expense on their income tax return. The bill also states that, for tax administration and enforcement purposes, this new tax is treated like an income tax under existing procedures. The changes would apply only to amounts received after the bill becomes law.

The bill focuses on limiting financial benefit that top federal officials and their relatives could receive from suing the United States for money damages tied to the President’s time in office. By taxing these lawsuit payments at 100%, it aims to remove any net gain from bringing such cases during that period. This could affect how current and former Presidents, and related high-level officials and their families, think about filing civil suits against the federal government. For the public, the bill touches on concerns about conflicts of interest and the use of public office for personal financial gain. It uses the tax code, rather than direct bans, to shape behavior. The exact impact on government finances and on the number or type of lawsuits filed is not clear from the text and would depend on how often such cases are brought and how courts handle related disputes. The bill also sets a precedent for using targeted tax rules on specific groups of officials for specific types of income. This may raise questions about equal treatment under tax law and about how far Congress should go in crafting special tax rules for certain offices and time periods.