Rep. Chu, Sen. Whitehouse Reintroduce Legislation to End Billionaires’ Tax-Free Giveaways to Dark Money Groups

WASHINGTON, D.C. — Today, Rep. Judy Chu (CA-28) and Sen. Sheldon Whitehouse (RI) reintroduced the End Tax Breaks for Dark Money Act, legislation to close a tax loophole that allows billionaires to avoid capital gains taxes by donating appreciated assets to dark money groups, effectively subsidizing the flow of secret money into American elections. 

Since the Supreme Court’s Citizens United decision in 2010 opened the floodgates to unlimited political spending, dark money has exploded in American elections. Political spending by groups that do not disclose their donors has surged from $103 million in the decade before the ruling to more than $1 billion in the decade after. In 2024, a record $1.9 billion in dark money flooded federal races, the most ever spent in a single U.S. election cycle. These groups have poured millions into campaigns that spread misinformation on issues from COVID-19 to climate change, all without ever telling the public who funds them. 

The tax code gives some of these wealthy donors another advantage. Normally, when millionaires or billionaires sell assets that have increased in value, they owe capital gains taxes on that increase. And Congress has already made clear that donors cannot avoid those taxes simply by transferring appreciated assets to Section 527 political organizations, including PACs.  

But a glaring loophole remains: that same rule does not apply to organizations organized under Sections 501(c)(4), (5), and (6) of the tax code. That means billionaires can pour highly valuable stock and other assets into dark money groups without paying a dime in taxes on their gains. 

The End Tax Breaks for Dark Money Act would close that loophole. The bill would apply the same tax treatment to transfers of appreciated property to 501(c)(4), (5), and (6) organizations that already applies to transfers to Section 527 political organizations. Simply put: billionaires would not get a special tax break for pouring their wealth into dark money groups and corrupting our political system. 

“Dark money has exploded since Citizens United, from under $5 million in 2006 to nearly $2 billion in the last election cycle alone, and it’s already flooding this year’s midterms. Billionaires already have outsized power over our politics. Even worse, they can secretly funnel their wealth into dark money groups and get a tax subsidy for it, an advantage traditional political donors don’t get,” said Rep. Chu. “That’s why I’ve partnered with Senator Whitehouse to reintroduce the End Tax Breaks for Dark Money Act. Our bill would close this loophole by applying the same tax rules we already apply to gifts to political organizations, so billionaires don’t get a free ride for bankrolling our elections in the shadows.”  

“Billionaire donors attempting to wield influence from the shadows should not be rewarded with giant tax write-offs,” said Sen. Whitehouse. “My legislation with Rep. Chu would end taxpayer subsidies for dark money donations and limit the flood of toxic dark money slime that’s corrupting our political system.” 

“We welcome the introduction of the End Tax Breaks for Dark Money Act. For years, the ultra-wealthy have exploited and rigged our broken tax system to their advantage, funneling billions into political campaigns while collecting hundreds of millions in tax breaks,” said Jodie Rubenstein, executive director of Americans for Tax Fairness. “This bill is a practical first step in taking on the power of dark money in our politics. It closes a tax loophole that allows wealthy donors to sidestep capital gains taxes by giving appreciated assets to politically active groups rather than paying taxes on the profit. To have a functioning democracy, we can’t incentivize or reward billionaires who seek to force their will on the political system.”  

“Until Congress finally gets around to outlawing Dark Money contributions altogether, the least it can do is ensure everyday taxpayers don’t subsidize Dark Money contributions from the super-rich,” said Robert Weissman, co-president of Public Citizen. “Sen. Whitehouse and Rep. Chu’s End Tax Breaks for Dark Money Act is common-sense legislation that should win support from every single member of Congress.” 

“There is no justifiable reason why rich people like me should be allowed to dominate our political system by donating massive sums of money to dark money political groups while also claiming a tax break in the process.  When our tax code allows super-rich people to manipulate the levers of government while paying almost no taxes, it enables millionaires and billionaires to circumvent the democratic process and rewards them financially for doing so,” said Morris Pearl, Chairman of the Patriotic Millionaires and a former Managing Director at BlackRock. "Our democracy is not for sale. If Congress allows the influence of the ultra-rich to go unchecked, we can only expect America to continue to tip further and further into an oligarchy. The Patriotic Millionaires applaud Rep. Chu, Sen. Whitehouse, and all their congressional colleagues for standing up against billionaires attempting to buy our democracy and be rewarded for it."   

“This Act is a critical tool that will help address runaway inequality by closing a tax loophole exploited by the ultra-wealthy and reducing the influence of oligarchs over our society,” said Nabil Ahmed, Senior Director of Economic Justice at Oxfam America. 

The bill is cosponsored by Reps. Danny Davis (IL-07), Chris Deluzio (PA-17), Rosa DeLauro (CT-03), Laura Friedman (CA-30), Jesús "Chuy" García (IL-04), Dan Goldman (NY-10), Jimmy Gomez (CA-34), Summer Lee (PA-12), Eleanor Holmes Norton (DC), Ilhan Omar (MN-05), Delia Ramirez (IL-03), Jamie Raskin (MD-08), Andrea Salinas (OR-06), Jan Schakowsky (IL-09), Lateefah Simon (CA-12), and Rashida Tlaib (MI-12). 

The End Tax Breaks for Dark Money Act is endorsed by AFL-CIO, Common Cause, the Excessive Wealth Disorder Institute (EWDi), Demand Progress, End Citizens United / Let America Vote, the Economic Policy Institute, the Institute for Policy Studies’ Program on Inequality, NETWORK Lobby for Catholic Social Justice, Oxfam America, Patriotic Millionaires, Public Citizen, Americans for Tax Fairness, United Steelworkers (USW). 

Read the full bill text HERE.