SHUTDOWN Act

Bill Number

S. 2973

Origin Chamber

Senate

Congress

119th Congress, Session 1

Policy Area

Taxation

Status

Introduced

Latest Action

2025-10-03: Read twice and referred to the Committee on Finance.

Last Updated

2025-10-20T13:01:39Z

AI-Generated Summary

Purpose

The legislation, titled the "Stop Holding Up Taxpayers, Deny wages On Washington's Negligence Act" (or "SHUTDOWN Act"), aims to create a financial penalty for members of Congress during periods when federal funding lapses, commonly known as government shutdowns. It seeks to discourage delays in passing appropriations bills by imposing a tax on congressional salaries during such times.

Key Provisions

• Imposition of Tax: Adds a new section (59B) to the Internal Revenue Code of 1986, creating a daily tax on members of Congress equal to a percentage of their wages earned for congressional service. This tax applies only during a "lapse in appropriations," defined as any period when no regular funding bill or temporary funding extension (continuing resolution) is in effect for any federal agency or department.
• Calculation of Tax:
• The "applicable percentage" is the ratio of days in the taxable year when the member served during a funding lapse to the total days they served as a member that year.
• "Applicable wages" are the member's salary for congressional duties, as defined under existing tax rules for withholding.
• Scope of Coverage:
• Applies to U.S. Senators, House Representatives, Delegates to the House, and the Resident Commissioner from Puerto Rico.
• The tax is in addition to any other federal taxes owed.
• Effective Date: Applies to tax years starting after December 31, 2024.

Significant Changes to Existing Law

• Introduces an entirely new part (Part VIII) to the Internal Revenue Code focused solely on taxes related to funding lapses, which does not currently exist.
• Modifies the tax code to target a specific group (congressional members) based on their role in government operations, rather than applying broadly to all taxpayers or wages.
• No changes to how funding lapses are defined or handled outside the tax context; it solely adds a fiscal consequence.

Potential Impacts

• On Government Agencies: Indirectly pressures Congress to pass funding measures more quickly, potentially reducing the frequency or duration of shutdowns that halt non-essential agency operations and furlough employees.
• On Citizens: Could minimize disruptions from shutdowns, such as delayed federal services (e.g., national parks closures or benefit processing delays), benefiting the public by promoting timely government funding. Tax revenue from the penalty might slightly increase federal funds, though the amount would depend on shutdown duration and congressional participation.
• On International Relations: No direct impact mentioned; the bill focuses on domestic funding processes.

Main Stakeholders Affected

• Primary: Members of Congress, who face direct wage reductions via the tax during shutdowns, creating a personal financial incentive to resolve funding disputes.
• Secondary: Federal employees and contractors potentially furloughed during shutdowns, who may benefit from fewer disruptions; the general public relying on uninterrupted government services; and the Internal Revenue Service (IRS), which would administer and collect the tax.

Notable Legal, Constitutional, or Political Implications

• Legal: Integrates the tax into the existing IRS framework for wage taxation, ensuring enforceability through standard tax collection processes. However, it could face challenges if viewed as an improper use of the tax code for non-revenue purposes (e.g., influencing legislative behavior).
• Constitutional: May raise questions under the separation of powers doctrine, as it imposes a penalty on one branch (Congress) for failing to fulfill its constitutional duty to appropriate funds (Article I, Section 9). Courts might scrutinize whether this interferes with legislative independence.
• Political: Serves as a deterrent against partisan standoffs over budgets, potentially shifting dynamics in negotiations but could be seen as punitive toward legislators, influencing how future funding bills are debated or politicized. The bill's introduction reflects ongoing congressional efforts to address shutdown gridlock without altering core budgeting rules.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Sen. Moreno, Bernie [R-OH]

Recent Actions

• 2025-10-03: Read twice and referred to the Committee on Finance.
• 2025-10-03: Introduced in Senate

Bill Versions

• Stop Holding Up Taxpayers, Deny wages On Washington’s Negligence Act — issued 2025-10-03 — PDF (4 pages)