The Congressional Institute
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How much outside income can a Member earn in a year?

How much outside income can a Member earn in a year?

Although some might imagine that their representatives in Congress do double-duty as heads of corporations and keep their former business interests as their first priority, this is not the case. The types of work that Members are allowed to do and the amount of money they are permitted to earn on top of their Congressional salary are strictly controlled by ethics rules that seek to keep Members focused on their official obligations to their constituents, rather than outside businesses.

The House and Senate rules follow the guidelines of the 1978 Ethics in Government Act when dealing with limits on outside income. Representatives and Senators are limited to earning 15% in excess of their yearly Congressional salary. No income from fiduciary relationships is allowed. These are a type of business association where an individual is trusted to manage the money or assets of others; this rule is intended to prevent situations where a conflict of interests could occur, such as if a Member was in a position to pass laws benefiting a company of which he or she is a board member. Many professions such as law and banking are considered to involved fiduciary relationships and are prohibited. Practicing doctors were given a special exemption from this regulation.

Members and their senior staff are not allowed to accept honoraria for speaking at events. This was enacted through the Ethics Reform Act of 1989 as part of a system to offer annual pay adjustments while regulating other income. Contributions under $2000 are allowed to charitable organizations in lieu of an honorarium as long as neither the Member nor any family members receive financial gain from the charity.

Income from personal investments is regarded as “unearned” income, and is not subject to the 15% rule. Because the Member is only collecting money based on assets that are already owned, no personal services are being performed and the income is not considered to be “earned.” Examples of unearned income include interest, rent, and stock dividends. Readers should note that the Ethics Committees reserve the right to interpret the source of an income and make a decision on it, regardless of how the Member describes the income. This prevents Members from receiving payments for actual services rendered in the guise of unearned income.

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