A tax break for trial lawyers?
News from Jonathan Adler at the Volokh Conspiracy; Democrats have finally found a tax break they can support - and it's for trial lawyers:
Walter Olson notes that some folks in Congress are pushing a tax break for trial lawyers. Specifically, the proposal would enable plaintiffs' lawyers to deduct loans to clients to cover litigation expenses as made, rather than at the conclusion of the litigation.
The estimated value of the tax code revision is $1.6 billion. Yet Victor Schwartz (among other things general counsel of the American Tort Reform Association) and Christopher Appel argue the revision could have broader implications:Those who practice plaintiffs' lawyer work learn quickly that it is a business similar to other capital businesses. Capital is placed at risk and a judgment is made whether or not it will bring a profit. Today the costs of litigation act as a curb against marginal and frivolous litigation. This is what makes the plaintiffs' lawyers' tax proposal of such great practical importance. While one cannot calculate it mathematically, having the federal government bear 40% of the initial costs allows plaintiff's attorneys to take more cases with higher risks. The result to industries targeted by plaintiffs' lawyers will be staggering.
Schwartz and Appel also challenge the argument that this reform would simply treat plaintiffs' attorneys' business expenses like those of other small businesses.
If you were wondering how Obama was going to repay the trial lawyers for their support during the campaign, wonder no longer.
Hat Tip: Ed Lasky