A bill aimed at preventing members of Congress from trading stocks could actually save them millions of dollars in capital gains taxes, the New York Post reports.
House Speaker Nancy Pelosi has signaled she likes the bill, though she has not endorsed it or any of the similar bills currently being discussed.
The bipartisan Ban on Congressional Stock Ownership Act, introduced by Sens. Elizabeth Warren, D-Mass., and Steve Daines, R-Mont., would be the hardest-hitting move ever against stock trading on Capitol Hill, the Post notes. Not only would it ban members of Congress and their spouses from trading stocks, but also would require them to put their assets in a blind trust.
They also would have to sell all their individual stock holdings, the Post reported, citing sources familiar with the bill.
That said, those who convert them into broad-based investment funds or Treasury bonds can defer paying capital gains until they sell their new assets. If they die before selling them, the taxes would be waived completely, according to the Post.
Pelosi, D-Calif, initially expressed little concern in the issue. Her husband, Paul Pelosi, is believed to have made tens of millions of dollars in stock trades on tech stocks during her time as speaker while she was regulating tech companies.
But she shifted gears in February, saying she was open to a ban. The Warren-Daines exemption could save her millions of dollars, according to the Post. Pelosi noted in a press conference last week that a similar capital gains deferral already exists in the executive branch where officials are banned from owning individual stocks.
"As you know, in the executive branch, when they divest of their stock, they don’t pay capital gains," Pelosi said. "So that’s an interesting feature."
It is even possible that the tax savings from the capital gains deferral could save members of Congress even more money than they would have made on trading individual stocks, Columbia Business School professor Robert Willens told the Post.
"It’s an absolutely reasonable thing to consider whether the advantages of tax deferral — if not permanent tax elimination if you die with the property — outweigh the advantages," Willens told The Post. "This in essence confines them to very safe and placid investments while also looking like they’re occupying the moral high ground."
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