Mike gallagher
Rep. Mike Gallagher (R-Wisc.) | U.S. House of Representatives

Gallagher: 'American taxpayers should not be forced to subsidize investments that benefit the Chinese Communist Party'

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Rep. Mike Gallagher (R-Wisc.), chair of the Select Committee on the Chinese Communist Party, has re-introduced legislation that would compel tax-exempt entities to divest from Chinese companies. The Dump Investments in Troublesome Communist Holdings Act (DITCH Act) was co-sponsored Sen.Josh Hawley (R-Mo.) and Select Committee members Rep. John Moolenaar (R-Mich.), Rep. Rob Wittman (R-Va.), and Rep. Darin LaHood (R-Ill.).

Gallagher reintroduced the bill Aug. 1, the Select Committee announced at the time. The bill, which was first introduced this past December, "would force non-profits, university endowments, public pension plans, and any other tax-exempt entity to divest from Chinese companies or lose their tax-exempt status," the release states.

"American taxpayers should not be forced to subsidize investments that benefit the Chinese Communist Party,” Gallagher said in the release. "Universities, non-profits, public pension funds, and other institutions that want preferential tax treatment must choose: are they committed to their professed values or to financing a genocidal communist regime?" 

Republicans' concern centers around support for the "People's Liberation Army" and the CCP's technology-driven authoritarian regime. Certain universities and non-profits have reportedly invested in Chinese companies like Hikvision, ZTE, and China Mobile, according to Fox News.

The legislation outlines that Chinese entities encompass corporations incorporated or operating in China, possessing over 10 percent of stock ownership (by vote or value) from a combination of Chinese entities, or being under direct or indirect ownership by a Chinese entity, which may involve derivative instruments or contractual arrangements. However, the Treasury Secretary retains the authority to provide a waiver under specific circumstances, particularly when a non-profit organization possesses Chinese assets but poses a minimal national security risk. The waiver process entails multiple stages, with one step being the requirement for the Treasury Secretary to issue a report within 360 days, according to a press release.

“Universities, foundations, and other entities are exempt from federal income tax for their work promoting the public good in the United States," said Hawley, according to a press release. "Investing in China does the opposite: it advances the economic ambitions and military modernization efforts of the Chinese Communist Party while selling out American workers and values. These tax-exempt entities must stop investing in China or lose their tax-exempt status."

"The Chinese Communist Party is the threat of our lifetime, and we must do everything we can to counter Beijing’s malicious agenda," said Wittman, according to a press release. “American universities, foundations, and other tax-exempt entities should not receive preferential treatment if they choose to finance a genocidal communist regime. I'm proud to join my colleagues in introducing this critical piece of legislation to ensure we prioritize American interests over profiting off the Chinese market."

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