Skip to comments.Biden push for $2.5B tax break for lawyers spurs accusations of political payoff
Posted on 11/23/2021 6:46:41 PM PST by Jim Robinson
Democrats have tucked a lucrative $2.5 billion tax break inside President Biden’s multitrillion-dollar social welfare bill that would benefit the trial lawyers lobby, spurring Republican accusations of political backscratching.
The tax break allows trial lawyers working on a contingency basis, meaning they are paid only if a case is settled in their favor, to deduct expenses immediately. Such expenses include hourly labor fees and the expenses associated with waging a lawsuit, such as filing and deposition costs.
On average, according to the American Bar Association, the fixed rate for contingency cases is anywhere between 33% and 40% of the total settlement payout. In some instances, the contingency fee can range upward of 50%.
Given that legal costs have soared in recent years, the Joint Committee on Taxation estimates the write-off would cost taxpayers $2.5 billion over the next decade.
Republican lawmakers argue the lucrative write-off is nothing more than a giveaway to the trial lawyers lobby, which heavily underwrote Mr. Biden’s presidential bid.
(Excerpt) Read more at washingtontimes.com ...
I assume such expenses were already deductible. How does letting them be deducted earlier cost the taxpayers $2.5B?
I agree with Shakespeare on this.
I think that they currently can’t write off expenses as they occur. The new gimme would allow them to charge whatever they want for hourly fees and write them off as losses and then get the big payoff when they settle the case, reducing their tax bill.
I think this is what it is.
“I agree with Shakespeare on this.”
No. He was wrong. First we kill all the educators. Then the journalists and finally the lawyers.
Oh OK, I saw ‘expenses’ and thought, you know, expenses, like real ones. Letting them deduct the value of their labor on a contingency case (essentially a speculative project) is bs. Would be like letting a salesman deduct the value of his time and claim it as a loss to offset commissions.
That would also lessen any disincentive to filing marginal cases, and a more litigious society is something we do not need.
But there are real educators, usually unemployed for daring to teach kids how to think instead of what to think.
IMO, special interest groups, corporations, and lobbyists do NOT represent the American public who are the ones paying the bills. They need to get their fingers out of the pie.
Yup—salesmen need to create a professional lobbying group to bribe politicians and do the same thing.
Fair is fair!
And what about people that get paid by the hour, or by the week on salary?? Shouldn’t all their work hours on all the days they don’t get paid count as an expense, too?
Everybody who pays the bribes gets the service.
Welcome to the third world!
In other headlines…
DOG BITES MAN
There is a solution. It begins with the repeal of the 16th Amendment - no more income taxes. We return to the original taxation model our founders established to be that base revenue to operate government. Specifically, that is the use of excise taxes and tariffs. There shouldn't be inheritance taxes. There shouldn't be business taxes. There shouldn't hidden taxes on every bill you pay; electric, cable, natural gas, cell phone, etc. There shouldn't be income taxes.
Obviously, this does not generate enough revenue to run the federal government. Thus, an additional tax is needed: a single, flat consumption (sales) tax on first time purchases collected by the states and sent to the Treasury Dept.
The rich consume a lot and they will pay a lot. The poor consume a little and they will pay a little. Everyone pays their fair share. More importantly, EVERYONE now knows how much they pay in taxes on every purchase they make. Perhaps, just perhaps, they might start to think about how the government spends that money. A key to this is receiving a your full paycheck. That money goes into your hands and you know where it goes because you make the decision on how to spend or save the entire paycheck.
A key hurdle in convincing people about this is their desire to punish big business. Democrats and Republicans have long vilified businesses to increase taxes on everyone. Business taxes are a charade, since businesses do not pay taxes. Consumers do. Businesses pass their tax bills onto consumers. Let's be transparent about it and have businesses collect a known sales tax that you get to see the sales receipt. Our current tax code relies on ignorance. Most people have no idea what businesses pay in taxes, nor do they know that they indirectly pay those taxes.
The savings to businesses will be immense. There will no longer be billions wasted on deciphering the tax code and filling out forms. No more tax lawyers. No more tax accountants. (They are intelligent people and can apply their skills to productive things - like building something or delivering a useful service.) Those savings will be passed on to consumers. Employees will see their entire paychecks (less state and local taxes, but a consumption tax works there too).
Businesses can focus on business - not taxes and all the overhead that has nothing to do with the product and services they deliver. That increases productivity which directly leads to a higher standard of living.
Imagine the benefits that American businesses will have over their global competitors. America can be the only industrialized nation that has zero business taxes. America will have the most productive businesses in the world and trounce the competition. The money businesses once spent on tax lawyers, tax accountants, and everything related to taxes can be spent on productive activities such as R&D. Simply put, businesses can focus on business.
As for global business competitors and enemies that use government subsidies and things like slave labor to dominate our markets the federal government can use it's constitutional power to levy tariffs.
The flat consumption tax should be collected by the states, using their current sales and use tax systems. This provides a new power to the states. It goes into their coffers before being transferred to the Treasure Dept. Use your imagination about the leverage states have through the withholding payments to the Treasury when the federal government goes against the will of the states.
A flat sales tax will eliminate lobbyists that specialize in getting tax breaks for some businesses while punishing others. This has a profound impact on competition among businesses. Competition leads to innovation, better products and services and most importantly lower prices for consumers.
There will be no more IRS.
There will be no more tax cheats.
People won't be pitted against each other. No more of this rich against the poor crap. No more of the anti-business rhetoric.
No more government picking winners and losers. Everyone is a loser since everyone pays taxes.
You get to decide what you do with your entire paycheck. It takes control out of the government's hands and puts it into your hands. That is freedom.
May I add that at the state and local level that property taxes should be abolished. That is required for true capitalism. No more of this leasing property from government. You get to truly own the things you buy.
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