SLUSH FUND Act of 2026
- Sponsor
- Rep. Thompson, Mike [D-CA-4]
- Committees
- Ways and Means Committee (primary)
- Last action
- May 19, 2026
Bottom line
The bill aims to prevent former Presidents and their associates from financially benefiting from civil settlements against the U.S. government by taxing such payments at 100% and ensuring public transparency regarding these transactions.
What it actually does
This bill amends the Internal Revenue Code of 1986 to impose a 100% tax on any settlement fund payment received by a 'specified person' (a former President, their family members, or controlled entities) from a civil action against the United States government. It also makes these payments non-deductible for income tax purposes and requires public reporting of such payments by fiduciaries.
Proponents argue
Supporters argue this bill ensures accountability and prevents potential abuse of public office for personal financial gain, promoting transparency and deterring actions that could lead to such settlements. They contend it closes a perceived loophole where individuals who served as President might benefit financially from legal actions against the government they once led, thereby upholding public trust.
Opponents contend
Critics might argue that this bill is highly targeted and potentially punitive, raising questions about due process or the fairness of a 100% tax on specific individuals, regardless of the merits of the underlying civil action. They might also contend that such a specific and high tax rate could be seen as an ex post facto law or a bill of attainder, or that it is a political measure rather than a serious legislative effort to address a widespread issue.
The bill is concise and clearly structured, allowing for a quick and thorough understanding of its provisions by an informed reader.
Sec. 2(a), new IRC Sec. 5000E(a)
Imposition of 100% Tax on Specified Settlement Fund Payments
This provision establishes a new tax within the Internal Revenue Code, imposing a 100% tax rate on any payment received by a 'specified person' during a taxable year. These payments must originate from a fund, trust, or account whose assets are derived from the outcome of a civil action filed by a 'specified person' against the United States government or any of its agencies or instrumentalities.
Supporters argue
Supporters argue that this provision is essential for ensuring accountability and preventing any personal financial enrichment by former Presidents or their close associates from legal actions against the government they once served. They believe it closes a potential loophole that could undermine public trust and the integrity of public office.
Critics contend
Critics might contend that a 100% tax is an extreme and potentially punitive measure, raising concerns about its fairness and whether it could be viewed as discriminatory against a specific class of individuals. They may also argue it sets a problematic precedent for targeted taxation.
Tradeoffs
The provision balances the goal of absolute accountability and deterrence against potential concerns about the fairness and constitutionality of a highly targeted, confiscatory tax rate.
Sec. 2(a), new IRC Sec. 5000E(b)
Definition of 'Specified Person' and 'Specified Settlement Fund Payment'
This section precisely defines who is subject to the 100% tax and what types of payments are covered. A 'specified person' includes any individual who has served as President, their spouse, and certain family members (as defined by IRC Section 152(d)(2)), as well as any entity controlled by these individuals. A 'specified settlement fund payment' is any amount received from a fund established as a result of a civil action filed by such a 'specified person' against the U.S. government.
Sec. 3(a), new IRC Sec. 6050BB(c)
Public Disclosure of Specified Settlement Fund Payment Returns
This provision mandates that the Secretary of the Treasury must make all returns related to specified settlement fund payments publicly available. This disclosure must occur within one month of the Secretary receiving the return from the trustee, administrator, or other fiduciary responsible for making the payment.
This provision explicitly states that specified settlement fund payments, despite being subject to the 100% tax, are not to be included in gross income for the purposes of Chapter 1 of the Internal Revenue Code (which deals with income taxes).
Sec. 2(a), new IRC Sec. 5000E(c)(2)
Why it matters:This is standard legislative practice for administrative details and technical clarifications within the tax code. It ensures that the 100% tax is treated as a separate excise-like tax rather than an income tax, avoiding potential double taxation or definitional conflicts.
Case for: Proponents would argue this clarification is essential for the proper functioning of the tax, ensuring that the 100% tax is the sole federal tax consequence for these payments and preventing complex interactions with standard income tax rules.
Case against: No specific opposition is typically raised against such technical clarifications, as they generally aim to prevent unintended consequences or ambiguities in the tax code.
Estimated impact: Ensures that the 100% tax is the only federal tax applied to these payments, simplifying compliance and preventing unintended additional tax burdens.
This provision amends an existing section of the Internal Revenue Code (Section 275(a)(6)) to explicitly add the new Chapter 50B tax (the 100% tax on specified settlement fund payments) to the list of taxes that are not deductible for income tax purposes.
Sec. 2(b), amending Section 275(a)(6)
Why it matters:This is a common legislative technique for integrating new tax provisions into the broader tax code by modifying existing, related sections. It ensures consistency in how different types of taxes are treated regarding deductibility.
Case for: Proponents would argue that making the 100% tax non-deductible is crucial to reinforce the bill's intent that recipients should not derive any net financial benefit from these payments. Allowing a deduction would undermine the punitive or deterrent effect of the 100% tax.
Case against: No specific opposition is typically raised against such technical clarifications, as they generally aim to prevent unintended consequences or ambiguities in the tax code.
Estimated impact: Ensures that the 100% tax represents a full and undiminished cost to the recipient, reinforcing the bill's objective of eliminating financial gain from such payments.