WASHINGTON, DC – As first reportedby Fox News, Chairman Rep. Mike Gallagher (R-WI) of the House Select Committee on the Chinese Communist Party (CCP), alongside Senator Josh Hawley (R-MO) and Select Committee members Rep. John Moolenaar (R-MI), Rep. Rob Wittman (R-VA), and Rep. Darin LaHood (R-IL), today, introduced the Dump Investments in Troublesome Communist Holdings Act (DITCH Act). This bill 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.
To prevent tax-exempt American entities from aiding the People's Liberation Army and helping the CCP finance its techno-totalitarian state, the DITCH Act:
Defines disqualified Chinese companies as any company:
- Incorporated or based in China,
- Has more than 10 percent of the stock (by vote or value) owned by some combination of Chinese entities, or
- Is directly or indirectly owned by a Chinese entity, including through a derivative instrument or other contractual arrangements.
Allows the Treasury Secretary to grant a waiver to certain non-profit entities if their need to hold certain Chinese assets outweighs the national security risk.
- Requires the Secretary to publicize the reasoning.
- Requires entities granted a waiver to submit regular reports.
- Requires the Treasury Secretary to publish a report within 360 days and then annually describing the patterns of outbound investment into China generally, including a sectoral breakdown.
"American taxpayers should not be forced to subsidize investments that benefit the Chinese Communist Party,” said Chairman Gallagher. "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?"
Senator Hawley said,“Universities, foundations, and other entities are exempt from federal income tax for their work promoting the public good in the United States. 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.”
Congressman Moolenaar said, “Under the CCP’s military-civil fusion there is no difference between doing business with CCP companies and doing business with China’s military. Along with the recent State Department travel warning that made it clear that doing due diligence on investments in China could lead to unwarranted detainment in a CCP prison, it is clearer than ever the CCP is not a reliable financial partner. America’s non-profits must stop investing in CCP companies.”
“The Chinese Communist Party is the threat of our lifetime, and we must do everything we can to counter Beijing’s malicious agenda,” said Rep. Rob Wittman.“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.”
“Organizations that receive preferential tax treatment should not be invested in CCP-backed companies that profit off genocide and unfair trade practices while making American taxpayers subsidize it,” said Rep. LaHood. “Tax exempt organizations are designed to promote the public good or provide a charitable service. These organizations have an obligation to protect the United States and our values.”
Chairman Gallagher and Senator Hawley previously introduced the DITCH Act in the 117th Congress.
