EXCLUSIVE: Congressional Republicans Propose Taking Away Tax-Exempt Status From Non-Profits Investing In China

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Michael Ginsberg Congressional Correspondent
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Congressional Republicans will introduce legislation later Thursday to revoke the tax-exempt status of non-profit organizations that invest in Chinese firms.

Wisconsin Rep. Mike Gallagher’s bill, the DITCH Act, prohibits non-profit organizations from investing in firms with major ties to China. Missouri Sen. Josh Hawley is introducing companion legislation in the Senate. Many Republican candidates and elected officials have expressed increased concern with Chinese-American economic entanglement, arguing that such dealings constitute a threat to national security.

The Dump Investments in Troublesome Communist Holdings (DITCH) Act requires non-profits to sell off their holdings in companies incorporated or primarily based in China. Other covered companies include those with at least ten percent Chinese ownership. Non-profits may apply with the Treasury Secretary for waivers if their need to hold Chinese assets “outweigh[s] the threat posed to the United States by China and the lack of separation between China and the disqualified Chinese company involved.”

Read the bill here:

Ditch Act Signed[97] by Michael Ginsberg

“Tax-exempt entities that invest in CCP-directed companies are not only profiting off of genocide, destroying the environment, and financing the PLA’s ability to build weapons that can kill Americans, but are also making U.S. taxpayers unwittingly subsidize it. This has to stop. Any entity that receives preferential tax treatment must make a choice: are they committed to their professed values, or are they committed to financing a genocidal communist regime and its malign efforts around the world? If a tax-exempt entity chooses to continue to sell out its own country for a small slice of the Chinese market, then they must lose their tax-exempt status,” Gallagher said in a statement to the Daily Caller.

One of the GOP’s biggest China hawks, Gallagher has proposed legislation to re-shore American pharmaceutical and semiconductor production. China controls the production of key drugs like ibuprofen, hydrocortisone, and amoxicillin, while an invasion of Taiwan would destroy the island’s semiconductor industry. Gallagher argued in an October speech at the Heritage Foundation that the U.S. must increase defense spending and weapons production to combat Chinese military might.

Chinese economic might was also a key issue during the 2022 midterms. Republican Ohio Sen.-elect JD Vance ran advertisements criticizing Chinese purchases of American farmland, while National Republican Senatorial Committee chairman Rick Scott of Florida cited the country’s fentanyl production and use of slave labor in arguments for decoupling. (RELATED: Biden Signs Executive Order Blocking Chinese Investments In US Technology)

“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,” Hawley added.