Stop Presidential Embezzlement Act Hits Top Officials with 100% Tax on Lawsuit Payouts Against the U.S. Government

The Stop Presidential Emoluments Act creates a total financial wall between top government officials and any money they might win in court from the United States. Specifically, the bill imposes a 100% tax on any damages or settlement money received by a 'covered person' from a civil lawsuit filed against the U.S. government. This tax applies if the lawsuit is filed, settled, or decided during the official's term in office or within one year of them leaving their post. To make sure this is airtight, the bill treats the payout as non-taxable for regular income purposes only because the government is already taking every single cent of it back through this special tax (Section 2).

Who Is In the Tax Crosshairs?

This isn't just about the person in the Oval Office. The bill casts a wide net that includes the President, the Vice President, Members of Congress, and high-level Executive Schedule I officials. But here is where it gets personal: the tax also applies to 'related persons' under Section 267(b) of the tax code. This means if a Congressperson’s spouse, sibling, or even a business they control wins a lawsuit against the government for something like a contract dispute or a property issue, the 100% tax kicks in. For example, if a President’s adult child ran a construction firm that sued the government over a federal building project and won $1 million, that entire amount would be owed back to the IRS the moment it was received.

The Cost of Public Service

While the goal is to stop officials from using their power to squeeze favorable settlements out of the departments they oversee, the real-world impact could be a legal dead end for those involved. Because the tax is set at 100%, it effectively removes any financial incentive or ability to seek legal redress. If a Member of Congress was injured in a crash involving a federal vehicle, they could technically sue, but any money awarded to cover their medical bills would be immediately seized by the tax man. This creates a unique situation where a specific group of citizens—and their extended families—essentially lose the practical benefit of the court system for any grievances involving the federal government during their time in service.

Closing the Loophole on 'Windfalls'

By labeling this as a tax and making it non-deductible, the bill ensures that no one can use clever accounting to keep a portion of a settlement. It’s a straight-shooting approach to ethics: if you are part of the government, you shouldn't be getting paid by the government through the back door of a courtroom. However, the one-year 'cooling off' period after leaving office means that even after someone hangs up their hat, they and their family remain in this financial 'no-fly zone' for 12 months. This could lead to a scenario where a former official has to delay legitimate legal claims just to ensure they aren't hit with a 100% tax rate on a valid judgment.