Taxpayer Protection Act

The Taxpayer Protection Act would limit the federal government from financially punishing what it calls “donor states.” It prohibits general prohibitions on awarding federal funding to a donor state (or its political subdivisions and public or nonprofit entities) and prohibits revoking or suspending current funding unless a Comptroller General finding shows fraud, waste, or abuse. A state would be designated a donor state if, on average over the three years before enactment, its residents paid more in federal income taxes than the state received in federal funding. The bill would also create a Donor State Protection Trust Fund in the Treasury, funded by taxes paid by donor-state residents, to make expenditures in donor states if the federal government is found to have violated the funding protections. Excess funds beyond a $4 trillion unobligated balance would be transferred to the general fund. These provisions would apply to taxes received after enactment.