Trial Lawyers Expecting Treasury Department To Give Them $1.6 Billion Tax Break

U.S. Treasury Secretary Tim Geithner laughs during remarks by first lady Michelle Obama during her visit to the U.S. Treasury in Washington, July 7, 2010.   REUTERS/Jason Reed  (UNITED STATES - Tags: POLITICS)

First question: How is it that the Treasury Department can go ahead and give the trial lawyers a tax break that Congress didn’t pass?

Second question: Why on earth would we want to give a tax break to trial lawyers for filing speculative lawsuits? It would, in fact, be a subsidy for lawsuits not unlike the mortgage deduction on your income tax is a subsidy for home ownership. That mortgage deduction is one of the chief reasons why our country has had troubles with housing bubbles (unlike Canada which has no such tax deduction).

Can you imagine what a tax-subsidized lawsuit bubble would do to our economy? If anything, we need tort reform in this country to reduce the number of lawsuits filed every year. Not subsidies that will make it cheaper and easier to file lawsuits.

VANCOUVER, Canada (Legal Newsline) – The nation’s trial lawyer group, the American Association for Justice, revealed Tuesday that it expects the U.S. Department of Treasury to soon give its members a tax break on contingency fee lawsuits.

The tax break could be similar to proposed legislation that didn’t make it through Congress last year. That proposal, sponsored by U.S. Sen. Arlen Specter, D-Pa., would have allowed attorneys to deduct fees and expenses up-front for filing contingency fee lawsuits.

John Bowman, the Director of Federal Relations for the AAJ, said in response to a question from a state delegate regarding recruiting new members that an administrative order from the Treasury Department could come as soon as tomorrow, sources told Legal Newsline.

So, basically, our elected representatives didn’t pass this tax break but the trial lawyers are expecting to get it anyway through the actions of the unelected bureaucrats at the Treasury Department.

Carter Wood notes that Congress has been considering this legislation for some time and that the politicians have simply not moved it forward:

Congress has had ample opportunity to vote on legislation to change tax law as desired by the trial lawyers. Sen. Arlen Specter (D-PA) introduced S. 437 in February 2009, and Rep. Artur Davis (D-AL) introduced H.R. 2519 in May 2009. The committees of jurisdiction did not take up the legislation because it’s political poison and bad policy — stimulating more economy-sapping litigation. As the American Association for Justice’s top lobbyist, Linda Lipsen, told trial lawyers at the AAJ’s convention last summer in San Francisco, “You cannot have a stand alone bill to help lawyers … so we have to tuck it into something.”

Laws are supposed to be passed by Congress and signed by the President. If Congress doesn’t act, then a given piece of legislation shouldn’t become law. This is Civics 101.

But apparently things work different for the trial lawyers.

Rob Port

Rob Port is the editor of In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters.

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