Chairman John Moolenaar (R-MI) of the House Select Committee on the Chinese Communist Party and U.S. Senator Marco Rubio (R-FL) have introduced the Patriotic Investment Act. This bicameral bill aims to prevent the U.S. tax code from rewarding investments in Communist China.

Wall Street financial firms often invest in Communist China, directing hundreds of billions of dollars into enterprises that support China's military, use slave labor, and violate trade rules. These actions are seen as detrimental to American businesses and jobs, as well as a threat to U.S. national security.

Currently, the U.S. tax code offers a low capital gains tax rate for these investments.

“For too long, Americans investing in China’s military-industrial complex have been given unfair tax breaks that allow them to profit from funding our adversary. That’s wrong and Senator Rubio and I are introducing this legislation to put a stop to this special treatment. Our nation’s tax code should be incentivizing investment in the United States, not collaboration with the CCP,” said Chairman Moolenaar.

“The Capital gains tax rate was meant to encourage investment in American innovation, not fund an oppressive communist regime, but Wall Street continues to give money to our adversaries and reap rewards from the American tax system. Enough is enough. My Patriotic Investment Act will level the playing field and ensure that our tax code no longer encourages investments that undercut American businesses and workers,” said Senator Rubio.

The bill proposes removing the beneficial capital gains tax rate for investments in Chinese securities, which would instead be taxed at the highest income rate. This increased rate would apply only to future financial gains, not those already accrued. Companies and individuals would have six months to divest after passage of the Patriotic Investment Act and could spread their tax payments over three years.