U.S. Senator Marco Rubio (R-FL) and U.S. Representative John Moolenaar (R-MI) have introduced the Patriotic Investment Act, a bill aimed at revoking the favorable capital gains tax rate for investments in Communist China.
This legislation comes in response to the significant investments by Wall Street firms in Chinese enterprises that support China’s military, rely on slave labor, and violate international trade regulations—actions that threaten U.S. national security and harm the American economy.
Currently, the U.S. tax code rewards these investments with a low capital gains tax rate, a benefit that Rubio and Moolenaar argue should be reserved for investments that support American innovation.
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“The capital gains tax rate was intended to encourage investment in American innovation, not fund an oppressive communist regime. Wall Street continues to funnel money to our adversaries while benefiting from the American tax system. Enough is enough. My Patriotic Investment Act will ensure that our tax code no longer rewards investments that undermine American businesses and workers,” said Rubio.
Moolenaar added, “For too long, Americans investing in China’s military-industrial complex have been granted unfair tax breaks that allow them to profit from funding our adversary. That’s wrong, and this legislation will put an end to this special treatment. Our tax code should promote investment in the United States, not collaboration with the CCP.”
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Key provisions of the Patriotic Investment Act:
- The bill would eliminate the preferential capital gains tax rate for investments in Chinese securities, taxing future gains at the highest income tax rate.
- The increased tax rate would only apply to financial gains accrued after the bill’s passage, not retroactively.
- Companies and individuals would have six months to divest from Chinese investments.
- Tax payments resulting from divestment could be spread out over three years.
This legislation is designed to encourage divestment from Chinese securities and ensure that the U.S. tax code prioritizes domestic investment over funding adversarial foreign regimes.
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