H.R. 4208 — Taxpayer Protection Act

This section prohibits the President or any other executive branch official from (1) imposing a general prohibition on awarding federal grants, contracts, or agreements to a donor state (or its political subdivisions or public or nonprofit entities therein); or (2) revoking or suspending any such existing award to a donor state (or its political subdivisions or public or nonprofit entities therein), unless the Comptroller General determines fraud, waste, or abuse. It defines donor state as any state whose taxpayers paid more in federal income taxes than the state received in total federal funding, on average over the three years preceding enactment; and public entity to include public schools and public hospitals.

This section establishes the Donor State Protection Trust Fund in the Treasury, to be funded by amounts equivalent to income taxes under subtitle A of the Internal Revenue Code paid by taxpayers of donor states (as defined in section 2(c) of the Taxpayer Protection Act). If unobligated fund balances exceed $4 trillion on December 31 of a calendar year, excess amounts transfer to the general fund of the Treasury. Fund amounts are available without further appropriation to a donor state solely if the President or executive branch violates the Taxpayer Protection Act by (1) prohibiting grants, contracts, or agreements with the state (or its political subdivisions or public/nonprofit entities) or (2) revoking or suspending such awards, limited in the latter case to the amount the state or entity would have received; the state determines necessary expenditures. The amendments apply to taxes received after enactment.